HALIFAX — While a higher dollar and increased competition continue to challenge Canadian film and television production, some provinces say they see signs of stability thanks to enhanced tax credits and a strong stable of domestic producers.

Nova Scotia, which typically ranks fourth in film production behind Ontario, British Columbia and Quebec, moved in 2007 to boost its film tax credit to 50 per cent from 35 per cent.

The change was made as several provinces, including neighbours P.E.I. and New Brunswick, introduced increased tax credits when many in the industry were ringing alarm bells over the impact of a higher loonie and fierce competition from the United States.

Ann MacKenzie, CEO of Film Nova Scotia, said the benefits of that increase were noticeable within the next fiscal year.

"It really kick-started 2008-09. That year ended up being our highest on record ... with $150 million in production," said MacKenzie.

Recent numbers released by the province show business declined in fiscal 2009-10 to $97 million, but that is still well above the $75 million registered in 2007, which was the lowest figure in a decade.

MacKenzie said that was largely due to the recession, which led to a drop in commissions from major broadcasters such as CTV and Global.

However, she believes the most recent figures also reveal the strength of Nova Scotia's production capacity because well over half, at $54 million, was generated by local producers.

"I think we're lucky in that we have a critical mass of local production that carries the industry even when we can't attract the foreign stuff," said MacKenzie. "Normally our local production is well over 50 per cent of the total and sometimes it's been as high as 70 or 80 per cent."

MacKenzie said the current calendar year has seen increased activity with the shooting of five feature films since February and two more are ready to go into production in the fall. There are also two larger budget television series that are shot in the Halifax area.

Independent filmmaker John Wesley Chisholm, who is based in Halifax, believes the province has created the conditions for local producers to compete, but the challenge will be to produce stories that will "interest the world."

Chisholm's company, Arcadia Entertainment, specializes in ocean-related documentaries and specials. He says a proliferation of specialty channels has created more opportunities than ever before.

"The market just keeps getting bigger, it's growing at over 10 per cent per year. So we have steady customers and a steadily increasing list of potential customers."

Production giant Ontario also saw a boost in its fortunes when the province enhanced its tax credits to cover any cost film productions incur for equipment, studio rentals and labour costs.

"The dollar is important, but now that our tax credit is more attractive the less we live and die on where the dollar goes," said Donna Zuchlinski, film commissioner with the Ontario Media Development Corp.

She said at $946 million in 2009, Ontario's film production approached the $1.1 billion registered in 2000, when the Canadian dollar was significantly lower than it is today.

But Zuchlinski said a solid core of diversified local companies accounted for the majority of the production figures at $674 million -- a number that also includes visual effects, animation and post-production work.

However, in smaller production centres such as New Brunswick, the challenge remains to drum up enough business so local producers can thrive.

Tim Hogan of Fredericton-based Dream Street Pictures said he doesn't see much potential for growth for the province's English-language companies, which currently aren't getting enough business from Canada's large private broadcasters.

Hogan contends that's in contrast to the province's French-language companies, which can access a special federal fund for productions shot outside Quebec. He said the extra help is key in an increasingly competitive landscape.

"There needs to be more money poured into development. The ratio is, for every 10 projects you put out there, one gets made," he said.