Mr. Ronan McCabe:

On behalf of Animation Ireland and my colleagues, Ms Moe Honan, who is our chair, and Ms Louise Cornally, who is a board member, I thank the committee for the invitation to appear before it to discuss the film and television tax credit - section 481. Animation Ireland welcomes the recent announcement of the extension of section 481 to 31 December 2028. Animation is a global business and is expensive to produce and projects are in planning many years in advance of production and distribution. This announcement will give certainty to our members in the financing and production of animation projects.

Animation Ireland is the representative body for the animation industry on the island of Ireland, with 42 member studios, employing approximately 2,500 people full time. The sector is well spread geographically with members operating in all parts of the island. There are established creative hubs in Belfast, Galway and Kilkenny and other members' studios are located in the counties of Clare, Cork, Derry, Offaly, Louth and Roscommon. Members are producing 2D and 3D animation for television and feature films and immersive content for the domestic and international market. The mix of our inherent national creativity and business acumen, coupled with our section 481 tax credit, has created a fertile ground in which the animation sector is growing exponentially. Animation Ireland members produce award winning, globally celebrated animation that is viewed in more than 180 countries and territories worldwide, building companies of scale, creating high-value, all-island and regionally spread investment and employment, embracing new technologies and nurturing Ireland’s culture on screen.

Animation Ireland comprises a range of companies, from one or two person operations running "ideas factories" to large-scale studios employing hundreds of animators, working in both the Irish and English language. The unique regional spread of companies was aided by the regional uplift and Animation Ireland would like to express its disappointment that this incentive has not been extended. Animation Ireland operates at the centre of a very sophisticated ecosystem and has regular engagement with stakeholders. Working in tandem with the industry, Animation Ireland has developed and implemented training programmes that are opening doors to many young people whose entry into the workforce will sustain the growth of the industry in the coming years.

Animation is a global and a competitive business. It is very labour intensive and expensive to produce.

Other jurisdictions offer a variety of regional and national tax credits, often exceeding that available here, and if Ireland is to remain competitive, it is essential that our tax credit is retained.

The animation industry in Ireland comprises two major components, namely, service work, which consists of producing animation for international partners by way of foreign direct investment, and our own intellectual property, IP, story development. Most Irish animation studios attempt to find a balance between service work, which affords companies the ability to build their studios and gain expertise by working with the major animation financiers and broadcasters, and reinvesting that expertise and capital into developing our own series and stories. The animation industry in Ireland has proven remarkably successful in both of those endeavours. In recent years, Ireland has been home to major productions such as "The Bob’s Burgers Movie", "The Cuphead Show!", "Vampirina" and "Zog and the Flying Doctors". These productions alone saw investments in Ireland of tens of millions of euro and served to showcase Irish creative talent. It is not only international stories that are told by Irish studios. Section 481 also supports indigenous production. Recent examples of which include the Oscar-nominated "Wolfwalkers", "Two by Two: Overboard!", "Jessy and Nessy", "Kiva Can Do!" and "Pins and Nettie".

There is a strong competitive environment for inward production or foreign direct investment in the locating of animation television series and film productions in EU member states. Ireland has punched well above its weight in that regard, and continues to do so. Many studios get their start by taking on service work and thereby gaining the experience to develop, pitch and produce their own projects.

The growth of major subscription video on demand, SVOD, streaming services, including Apple+, Amazon Prime Video and Netflix, in the past ten years has meant that demand for content has never been greater. This has provided opportunities and threats for our industry. On the plus side, there are well resourced customers seeking content but, on the downside, many SVODs insist on retaining 100% of the IP in the content. The ability of Irish producers to bring Irish financing to a project in the form of section 481 and broadcaster and screen agency investments is critical to Irish studios’ ability to retain IP. The funds generated from IP are then invested in the development of future projects - securing jobs, building companies of scale and creating a virtuous circle of investment for companies.

Screen content plays a vital role in how Ireland is perceived abroad and is an essential element of our cultural exports and the projection of Ireland’s soft power. Without indigenous content, Irish audiences would not see their stories reflected back at them on screen and diverse storytelling voices simply would not be heard. Without section 481, our domestic market simply would not have the resources to bring our stories to the world. Any review of section 481 must, of course, include a financial analysis for the taxpayer, but it must also include a full recognition of the cultural dividend of screen content production made in Ireland for Irish and global audiences. On behalf of Animation Ireland, I thank the committee.