Next year seems likely to produce the most significant changes in the Irish film industry since Michael D. Higgins re-established the Film Board more than five years ago. With the industry think tank now due to report to The Minister for the Arts etc, Sile de Valera, by late January, the industry can expect new developments and structures over the course of the year.

Last week's announcement by Sile de Valera of a £750,000 increase in next year's allocation to the Film Board is just the first indication of policy and personnel changes which will affect many aspects of production. The additional finance will go towards enhancing the board's support of projects in development, allowing for an increase in the maximum development loan allowable towards projects from £25,000 to £50,000.

As part of its increased commitment to development, the IFB has just announced the appointment of a new development manager. Mary Callery, currently with RTE's independent productions unit, will take up her new post early in the New Year. "It's important to point out this job is as development manager, not just script editor," says Rod Stoneman, chief executive of the board. Stoneman says the role of the new officer will be to make sure Irish production companies receive the support they need to acquire rights to intellectual properties and develop them to the stage where they have significant value in the international marketplace.

Historically, European cinema has been very bad at development, the process of bringing an idea, whether original or based on some other source, to the point where it is a fully-financed script ready to go into production. The situation on this side of the Atlantic is often contrasted unfavourably with the US, where a much larger percentage of overall expenditure is put into development.

Ed Guiney, chair of the producers' organisation, Film Makers Ireland, enthusiastically welcomes the Board's initiative. "In a situation like Ireland, where there are limited, finite resources, it makes sense to prioritise by putting more of those resources into development," he argues. "In a small country we're never going to have enough muscle to fully finance our productions, but if you develop a script yourself, you have the chance to bring it to the marketplace with some clout of your own."

Although the Film Board has proudly pointed out its relatively high "hit rate" of developed scripts which have gone into production here, Guiney believes we have to understand that a script is not necessarily a good script just because it's been filmed. "The UK isn't particularly good at putting money into development. If you're doing this you have to realise that there's a natural attrition rate - not all scripts can make the cut at the end of the day."

With Callery leaving RTE only a few weeks after the departure of David Blake Knox to the BBC, the two faces most associated with independent drama production at Montrose have now departed, presenting RTE with the opportunity to take a more focussed approach to television drama, Guiney believes. "Television drama is an absolutely crucial part of the industry, but it's been missing up to now. There has always been a difficulty in knowing who makes the decisions in RTE on these issues. There's difficulties on both sides, but I think producers are now thinking more clearly about drama for television, because they have to offer RTE the right projects."

Guiney would like to see RTE become more involved in script development as well. "And then we can go out and find the kind of international co-production arrangements which you need to finance broadcast drama."

Stoneman agrees, and is optimistic about the future. "I hope the coincidental departure of both David and Mary is an opportunity for RTE to develop a structure and budget for drama, as part of a developing partnership between RTE and the Film Board."

But a ripple of unease has spread through the industry in recent weeks over rumours that the linchpin of Irish film financing, Section 481 (formerly Section 35) tax incentives, may be under threat. It's no secret that the Department of Finance has long regarded Section 481 as an unwarranted extravagance, but the rumours have been further encouraged by reports that a report commissioned by Sile de Valera may criticise the amount of "leakage" taking place in the tax incentive process. With so much of the money going into the pockets of brokers, lawyers and others, the argument goes, Section 481 is a wasteful way for the Government to be stimulating film production.

It has been suggested that the incentives should be replaced by some type of grant aid to film productions, based on the amount they spend in this country, but this proposal is firmly rejected by most Irish producers.

"One of the good things that's happened here through Section 481 is the relationship that's been built up between production companies and the financial community," says one. "I think that most producers wouldn't be happy with the notion of a grant mentality and its implications."

The difficulties involved in effecting a smooth transition from one sort of film financing mechanism to quite a different kind make it unlikely there will be any radical changes in the next few months, many producers believe, but one was concerned that even a suggestion of future changes could undermine confidence in the early months of 1999. "If I don't see a reference to Section 481 in next week's budget, I'll be concerned about the possible repercussions," he warned.