premier darrell dexter may 16, 2013

7/28/2019 Premier Darrell Dexter May 16, 2013

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2387 Connaught Avenue, Halifax, Nova Scotia B3L 2Z5Telephone: (902) 425-1819

E-mail: [email protected]

Bruce KlingerArts Management & Consulting

May 16, 2013

Honourable Darrell Dexter Premier and Minister of Policy and PrioritiesOffice of the Premier 7th Floor, One Government Place1700 Granville StreetHalifax, NS B3J 2Y3

Dear Premier Dexter:

Sometime next week I will be announcing a summer of dramatically reduced activity for Valley Summer Theatre, a professional theatre company that has been operating out of Wolfville, Nova Scotia since 2009. In announcing what will be happening this summer itwill be impossible to avoid addressing some policies of your government and, since I donot believe in blindsiding anyone, I wanted to get you this letter prior to making theannouncement. I have also copied the letter to others who may have a particular interest.

I do want to begin on one positive note. In dealing with some of the issues addressed inthis letter I have had a number of instances to correspond and speak with the Honourable

Ramona Jennex, MLA for Kings South and Jim Morton, MLA for Kings North. They both were very approachable and incredible prompt in addressing my concerns.Unfortunately, despite what I perceived as their good intentions and diligent work, theredid not appear to be anything they could do to ensure we would not find ourselves in the

position we are today.

While what is happening to a small professional theatre company may not be a huge issuefor the province I think it can be used to illustrate some of the more major problems withcultural policy in Nova Scotia.

Valley Summer Theatre s situation will allow for a discussion regarding the government

funding bias towards the for profit portion of the cultural sector as opposed to the not -for- profit portion and, in light of recent decisions by your govern ment, this discussionwould appear to be timely.

In an attempt to give some structure to this letter I will separate the specifics of the ValleySummer Theatre situation from the broader policy concerns. I apologize in advance for the length of the letter but I believe these issues to be important.


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Premier Darrell Dexter 16/05/2013 2

Valley Summer Theatres situation

By many measures Valley Summ er Theatres first years of existence have been quitesuccessful.

In the last three years, 26 professional theatre companies in Nova Scotia have receivednominations for the annual Merritt Awards which recognize excellence in Nova ScotiaTheatre. Only two of those 26 companies have had more award nominations than ValleySummer Theatre. Of the 17 nominations Valley Summer Theatre received in that periodthree were for Outstanding Production. We have been honoured by this peer recognitionwhich we think speaks highly of the quality of our work.

Ticket sales for Valley Summer Theatre have always exceeded 50% of total revenues andamounts from fundraising have increased each and every year we have been in existence.Every dollar in provincial government grants the company has received has resulted inover eight dollars of production which is an important point I will return to in the later

portion of this letter. These accomplishments would be the envy of most companies of our age and size. Despite this success, the company did not receive any support from the provincial government for a 2013 season.

The issues around why the province of Nova Scotia is not supporting one of NovaScotias most successful new professional theatre companies began last year. ValleySummer Theatres 2011 season was a particularly successful one. We sold over $60,000in tickets and both our productions were nominated for Outstanding Production at theannual Merritt Awards. Our production of Driving Miss Daisy won that award. After such a successful season we felt it was a good time to apply for operating funding fromthe province which we did on February 15, 2012. Before applying we reviewed the

provinces published criteria for operating grants . There was nothing in those criteria thatwould suggest the company was not eligible.

Despite meeting the published criteria for operating grant eligibility we received a letter on May 16, 2012 from Marcel McKeough, Executive Director of Communities, Cultureand Heritage to say we were ineligible for funding. Neither that letter, nor a subsequentletter from Mr. McKeough dated July 11, 2012 answered the major concerns VST hadregarding the decision that staff at Communities, Culture & Heritage had made being:

1. Valley Summer Theatre met the provinces published eligibility criteria for anoperating grant and there was nothing in the published criteria that should have

deemed our application ineligible;2. If staff at the Culture & Heritage Development Division had deemed the operating

grant ineligible we should have been notified immediately, not well after thecompetition had been completed, so this issue could have been adjudicated

properly before the competition.

The two concernss above were the reasons I initiated contact with Ms. Jennex and Mr.Morton. Both had discussions with representatives of Communities, Culture & Heritage.


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Nothing changed as a result of those discussions except that both Ms. Jennex and Mr.Morton asked me to meet with either Mr. McKeough or Craig Beaton, Director of Programs to discuss the issue with them directly.

On August 20, 2012 I wrote Mr. McKeough asking for that meeting. I copied that letter

to Mr. Beaton and others including yourself and the Minister of Communities, Cultureand Heritage. I never received a response to that letter. On October 2, 2012 I e-mailedMr. McKeough (and copied Mr. Beaton and the Minister, among others) asking if Iwould receive a response to the letter. I have never received a response to that e-mail.

I have been involved in Nova Scotias arts and culture sector for over thirty years andhave known Mr. McKeough for most of that time. His failure to respond was not only aninsult to me it was also an insult to Ms. Jennex and Mr. Morton who specifically askedme to contact the department.

The reason the actions of the staff of Communities, Culture & Heritage is important is as

follows: Nova Scotia has only one operating grant deadline for cultural organizations.Those who apply do not find out the results of those applications until mid-May or later.This timing is much too late for a professional summer organization to plan appropriatelyand that is why a summer organization applying for the first time cannot rely on fundingfrom the operating program for the summer of the year they first apply. This would be anexcellent reason why the published criteria for operating funding did not say thatcompanies with project funding would not be eligible for operating funding while it didsay that companies with operating funding could not apply for project funding. I couldgo into much more detail on the things that operating funding can cover that projectfunding does not to further illustrate how wrong that staff decision was suffice it to say,if staff had followed the published criteria the jury should have adjudicated our application. They never got that opportunity.

Had the operating jury actually looked at our application there would be no guarantee thatwe would have received funding through that program but we will never know what theresults would have been because of the actions of staff. If we had received an operatinggrant at that time we would be doing a season in 2013.

Having not even been considered for an operating grant last year we needed to apply for project funding if we were to be able to do a season this summer. We made anapplication to the October 15, 2012 project grant deadline. Only eleven of the thirty-oneapplications to that deadline were approved and Valley Summer Theatre was not one of those approved. This has meant that after our very successful first years we now have

been forced to take a major step back and cannot do a season of significance thanksentirely to lack of provincial funding.


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Cultural Sector Funding decisions of the province

While I think what has happened to Valley Summer Theatre is incredibly unfortunate I believe what it illustrates about the provinces broader cultural sector policies is moreimportant.

As stated earlier, the October 15, 2012 project grant deadline had 31 applications andapparently there was only enough money to fund 11 of those projects leaving nothing for a company with Valley Summer Theatres track record. Companies that are fundedthrough the provinces operati ng fund program are often started off at incredibly lowlevels (57% of the operating grants to cultural organizations awarded in 2012 were below$25,000 and almost 25% are under $10,000) with very limited prospects for anysignificant increases unless those increases come at the expense of other companies withoperating funding. While governments have often cited overall budget difficulties todefend the level of funding of the not-for-profit cultural sector I think it worthwhile tocompare what is happening to not-for-profits to how your government is treating the for-

profit cultural sector.Late last year I noticed, with a good amount of surprise and dismay, that your government was broadening the mandate of Film Nova Scotia. During the announcementthe Minister of Economic Development stated Over the years Film Nova Scotia, alongwith a number of agencies, councils and other organizations, have been growing andsupporting our film and creative businesses. While it is true that the mandate of Film

Nova Scotia was indeed to grow the film industry in the province the Minister shouldhave known the growing part of his statement was simply not true.

The following is a table of readily available information on the Film Industry in NovaScotia.

NOVA SCOTIA FILM PRODUCTION INFORMATION ($ millions)Fiscal Total Film Film NS NS Film NetYear Production Grant Tax Credit Result

1999-00 1 30 3.0 4.1 122.92000-01 100 2.4 12.6 85.02001-02 1 32 2.5 8.6 120.92002-03 1 20 2.4 8.9 108.72003-04 113 2.7 15.0 95.32004-05 104 2.5 ? ?2005-06 1 21 3.1 7.6 110.32006-07 136 3.1 14.4 118.52007-08 76 3.1 10.7 62.12008-09 150 3.7 22.1 124.22009-10 97 3.2 16.4 77.42010-11 112 3.5 11.4 97.12011-12 115 3.1 24.6 87.3


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I have highlighted the years 1999-00 to 2003-04 in green so we could compare them tothe last five years for which we have information (highlighted in yellow). I chose theearlier years because they are years covered in a rather major study of Nova Scotias FilmIndustry 1.

The average amount of film production in the years 1999-00 to 2003-04 was $119 millioncompared to average film production amount in the last five years of $110 million. Few people would call that growing the film industry.

The average cost to the province for refundable film tax credits to obtain the $119 millionin production from 1999-00 to 2003-04 was $9.8 million. The average cost in the lastfive years was $17.1 million to obtain $110 million in production. On average it iscosting the government $7.3 million more each year to obtain $9 million less in

production.

The reason for the higher costs in refundable film tax credits is over the years provincial

governments have been increasing the percentage of costs these grants cover. During the1999-00 to 2003-04 period the refundable tax credits amounted to 32.5% of Nova Scotialabour costs up to a maximum of 16.25% of the films cost. This was later increased to35% of labour costs up to 17.5% of costs and later still to 50% of labour costs up to 25%of costs.

In December of 2010, despite being aware these increases in the refundable film taxcredits had not resulted in increases in film production for the province, your governmentdecided to further increase the refundable film tax credit and digital media tax credits sothat they would no longer have a cap on overall costs. The 2011-12 year would have

been the first full year when this policy was in place. The table above shows it cost thegovernment $24.6 million in refundable tax credits that year and $115 million in

production was carried out. This was a ratio of $4.67 million in production for every$1.00 in refundable tax credit. As stated earlier the ratio of production to provincial grantcost for Valley Summer Theatre was over $8.00 in production for every $1.00 in

provincial grant. Valley Summer Theatres results would not be out of line with many of Nova Scotias not -for-profit operating companies, some of which would have even moreimpressive results.

The December 2010 decision to yet again increase the refundable tax credit, and the morerecent decision to broaden the mandate of an organization that was not fulfilling itsoriginal mandate were baffling to me. Who advises governments to make such decisionsdespite what the facts indicate and why would governments make such decisions?

Having worked in the not-for-profit arts and culture sector of Nova Scotia all my career this is certainly not the first time I have noticed the bias of government support towardsthe for-profit sector. With these decisions continually being made it may be time for a

public discussion of the matter.

1 Nova Scotia Film, Television and New Media Industry: Impact Analysis and Long Term Strategy


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It seems to me when the government does transfer money to the for-profit sector it shoulddo so with extra care. The for-profit sector does not go through the same screening

process in regard to benefits to society that the not-for-profit sector goes through. Rather than having an easier hurdle to jump to receive government support one would think thehurdle for the for-profit sector would be higher.

The reason for a bias towards the for-profit sector may be related to an inherent biastowards tax credits as opposed to grants. One often feels the government regards the taxcredits given to the for-profit sector as inherently superior to the grants given the not-for-

profit sector. This bias would be more understandable in instances of non-refundable taxcredits, which would require the recipient to actually have to pay tax, as opposed to arefundable tax credit, which the recipient would receive whether or not they paid anytaxes.

Earlier I mentio ned the major study of Nova Scotias film industry covering 1999-00 to2003-04. That study examined revenues coming to the province from the film industry.

Due to a time lag they had information on corporate taxes paid by the provinces film production companies between 1996 and 2001 and found total taxes paid amounted toonly $34,000 each year which they determined to be so low as to not be worth includingin their estimates of provincial revenues.

An April 17, 2013 article by Mark Milke in the Huffington Post describes the issue well:

Many of the film tax credits available are refundable . That means film companies canwipe away their tax payable and then receive a cheque from the public treasury for theremaining value of the credit. That's why, as the Ontario government wrote in its 2012budget , "such expenditures made through the tax system are, in substance, transfers or

grants."

The Province of Alberta does not have refundable tax credits to support its film industryand instead uses non-recoupable grants. If the province of Nova Scotia were to adoptsuch a program it could base the grants on the same calculations it bases the tax credits

but it could also allow not-for-profit cultural organizations to apply for the same grants -calculated in the same way. This would be an immense benefit to the prov inces not -for-

profit cultural sector and could be examined over a five year period with the relativegrowth of the not-for-profit sector weighed against the for profit sector to see which gavea better bang for the buck. I have never heard a good answer as to why a dollar paid toa film actor/designer/technician is more valuable to the province than a dollar paid to atheatre actor/designer/technician especially because they can often be the same people.

As stated at the beginning of this letter, next week I will be announcing the very modestactivities Valley Summer Theatre will be doing this summer and, in so doing, it will benecessary to discuss why those activities will be so modest after the success of our firstfour years. I hope this will allow some discussion as to the decisions the province has

been making in regard to cultural sector policy which may mean that something goodmight come from these very unfortunate circumstances.
http://www.pwc.com/ca/en/entertainment-media/film-video-tax-incentives-canada.jhtmlhttp://www.pwc.com/ca/en/entertainment-media/film-video-tax-incentives-canada.jhtmlhttp://www.pwc.com/ca/en/entertainment-media/film-video-tax-incentives-canada.jhtmlhttp://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/papers_all.pdfhttp://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/papers_all.pdfhttp://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/papers_all.pdfhttp://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/papers_all.pdfhttp://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/papers_all.pdfhttp://www.fin.gov.on.ca/en/budget/ontariobudgets/2012/papers_all.pdfhttp://www.pwc.com/ca/en/entertainment-media/film-video-tax-incentives-canada.jhtml


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Yours truly,

Bruce Klinger

cc: Honourable Leonard Preyra, Minister of Communities, Culture & HeritageHonourable Graham Steele, Minister of Economic and Rural Development and TourismHonourable Ramona Jennex, Minister of Education and Early Childhood DevelopmentMr. Jim Morton, MLA King s NorthMr. Marcel McKeough, Executive Director, Culture & Heritage Development Division

premier darrell dexter may 16, 2013

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