Value for money? Auditor General questions Johann Grech's spend

Caroline Muscat - 16. November. 2024

A report on the film industry published last week by the Auditor General raises the question of whether taxpayers are getting value for money on the millions spent by Commissioner Johann Grech.

While the National Audit Office (NAO) is legally restricted from commenting on policy, the report’s running theme is that the government should consider whether the return on investment through the film production industry was adequate.

Tourism Minister Clayton Bartolo is responsible for the Film Commission. He is currently at the centre of controversy for giving his wife a job for which she was not qualified but was given close to €70,000.

The NAO said the expenditure was a key consideration when deciding on future financial injections in the film sector. “This would be necessary to retain and improve Malta’s status as a top film-producing destination.”

The Malta Film Commission’s (MFC) total expenditure on administrative, marketing and operational costs amounted to over €12.3 million from 2018 to 2022.

Malta Film Commission expenditure. Source: NAO

The NAO report was critical of the absence of a comprehensive marketing plan, although it said the MFC adopted industry best practices.

But events were “extravagant”, such as Malta Film Week and Malta Film Awards. The NAO voiced its concern that “the MFC was not able to do a reliable and scientific assessment on the impact of the €1.3 million event in 2022.

“Of note, is that the MFC operational and promotional expenditure increased by over 62% in 2022 over the previous year, that is from €2.6 million to €4.2 million. In part, this increase can be attributed to the €1.3 million expenditure incurred to host the Malta Film Week.”

Only 7% of the income to cover MFC expenses was generated through sponsorships. The remaining 93 % all came from the government.

Malta Film Commission income. Source: NAO.;:

The report addresses the MFC’s decision to increase the cash rebate scheme’s grant rate from 27% to 40%: “In 2023, the current rebate scheme was at par with the six countries worldwide that were offering the highest financial incentive for the film industry.”

The MFC cash rebate scheme – a production incentive in the form of reimbursement available to national and international qualifying companies – was increased to 40% in 2019.

The cash rebate scheme would increase to 50% of eligible expenditure in cases of a qualifying production considered as a ‘Difficult Audiovisual Work’.

Multiple types of productions can benefit from this rebate, provided that they are entirely or partially filmed in Malta. The minimum spend to qualify for this rebate scheme must be €100,000 in Malta, with an overall budget exceeding €200,000.

Between September 2018 and August 2023, a significant increase was registered in the number of film productions benefitting from the 40% cash rebate.

The report notes that MFC did not carry out visibility studies prior to the implementation of the fiscal incentives schemes, such as the 40% cash rebate.

The annual average increase in the film production expenditure eligible for cash rebate was estimated at €23.4 million annually, according to the NAO report.

“While the results are to be noted, it is the policymaker’s responsibility to evaluate if the return that the scheme is yielding from the film industry is deemed sufficient. The policy maker’s analysis should consider the above within a broader context of the formulation and implementation of the overall Maltese economic policy.”

The report notes that the adoption of a comprehensive film strategy for the period up to 2030 remains outstanding.

“The MFC does not have an approved strategy in place covering the period from 2021 onwards, yet it organises various promotional events, has introduced a more generous rebate scheme for film productions in Malta and has undergone a range of infrastructural upgrades at its facilities… most of these actions are not supported by documented studies highlighting predetermined outcomes in terms of sustainable economic, social and environmental benefits”.