Malta’s film industry has flourished in recent years, bolstered by government investments amounting to €143m in subsidies for 54 films and television series over the past five years. Central to this success is a generous 40% cash rebate scheme, which has attracted blockbuster productions like Gladiator 2. Through the Malta Film Commission (MFC), the Maltese government paid a record-breaking €46.7m of taxpayers’ money to Paramount Studios for the production of the Gladiator sequel. Released last month, the film grossed $314m worldwide, showcasing Malta’s appeal as a global filming destination. However, this record sum of state aid raises questions about whether Malta’s film subsidies deliver sustainable economic returns or represent an unsustainable strain on public funds.
The €46.7m subsidy for Gladiator 2 is emblematic of Malta’s aggressive approach to film industry support. However, according to Times of Malta reports, industry insiders estimate that nearly half of such productions’ budgets are spent outside Malta – on actors’ salaries and services provided by foreign companies. This suggests that only a fraction of the film’s expenditure, estimated at €10m, directly benefits the local economy.
Despite this, the government asserts that its subsidies generally have yielded measurable financial benefits. The 2023 Economic Impact Study reported €72.7m in local expenditures from film productions in 2022, generating €93.8m in Gross Value Added (GVA). This figure reflects both direct spending on Maltese services and spillover benefits, such as increased screen tourism. Productions like Gladiator 2 have supported ancillary sectors like manufacturing and retail, which saw returns of 29% and 10%, respectively.
Moreover, employment in the film industry has grown significantly. In 2022, 1,772 full-time equivalent (FTE) jobs were supported, with 78% of crew members being local. This demonstrates the potential of Malta’s film incentives to create substantial employment opportunities and foster knowledge transfer within the creative workforce.
While the economic gains from subsidies are notable, the lack of transparency in the MFC’s operations has drawn criticism. A recent National Audit Office (NAO) review highlighted the shortcomings in the organisation of events like the 2022 Malta Film Week, which incurred €1.3m in expenses – far exceeding its initial budget of €400,000. Concerns were raised over the absence of proper documentation for budget prioritisation and service provider selection, as well as the failure to secure ministerial approvals for high-value expenditures. The report also criticised the concentration of decision-making in the hands of the film commissioner, exacerbated by understaffing. However, the Commission has since implemented measures to address these shortcomings, such as hiring additional staff and improving administrative processes.
Nevertheless, the NAO review confirmed the principal positive economic impacts of the 40% cash rebate scheme and, thus, the conclusion of the 2023 Economic Impact Study. The study showed that between September 2018 and August 2023, the MFC awarded €143.8m in rebates, with the programme delivering a return of €1.14 in tax revenue for every €1 spent. Additionally, the scheme was found to boast a broader economic multiplier of €3, underscoring its far-reaching impact.
Similarly, the tourism minister cited an economic impact assessment, commissioned by direct order from advisory firm KSi (now rebranded as CLA), claiming that every euro spent on the film industry generates three times its value in economic returns. However, concerns have been raised about the transparency of this report, as it has not been made publicly available for independent verification. While the minister recently resigned, the lack of access to the report leaves questions unanswered about the validity of this impressive multiplier effect and the broader accountability of such evaluations.
Beyond direct subsidies, Malta has also invested in promotional and cultural initiatives, such as the controversial Mediterrane Film Festival, which cost €3.9m. While an impact assessment by RSM estimated the festival’s economic activity at €7m, including spillover effects, its direct GVA is estimated only at around €1.4m, rising to €2.5m when all spillover effects are accounted for.
As Malta continues to leverage its film-friendly policies and initiatives, ensuring fiscal responsibility and transparency seems to be paramount. The NAO report emphasised that while the commercial and competitive nature of the film industry often clashes with public governance frameworks, careful planning and adherence to transparency principles can bridge this gap. By demonstrating that subsidies contribute directly to sustainable economic growth, the government can maintain public trust and ensure the longevity of its film incentive programmes.
While Malta’s film subsidies have undoubtedly brought economic and cultural benefits, they also come with challenges that cannot be ignored. The record-breaking €46.7m subsidy for Gladiator 2 exemplifies the potential for both significant returns and public concern over fiscal responsibility. Moving forward, the government must strike a balance between attracting international productions and fostering local talent, ensuring that its investments yield long-term, sustainable benefits for Malta’s economy and creative sector. Only through transparent practices and strategic diversification can Malta solidify its status as a global filming hub while addressing the concerns raised by stakeholders.