I've quoted this before:
The director Stephen Frears recalls meeting him soon after he had announced a big increase in money for films. "Do you know what you've done?'' the movie man asked. "Created a rush of absolutely terrible British films?'' the benefactor replied, laughing.Fair play to Gordon Brown, he does at least realise that subsidies are anathema to good movies. Sure he does it anyway in order to but publicity but at least he knows that it is wrong. There is a pretty decent correlation with the level of subsidy a country offers and the paucity of it's actual cinematic output.
Quite often after watching a few good films from one country I try to look up
details of their subsidy regime and almost always they have relatively low subsidy regimes, so for example Germany which has produced numerous excellent films in recent years and sure enough they spend less than half of what France spends and far less the the UK shovels out. So whilst we make tedious gangster movies the Germans are producing masterpieces such as 'The Lives of Others'. Similarly I've noticed a lot of good Brazilian films in recent years and sure enough their government drastically reduced subsidies in the 1990s.
The ironic thing about government film funding is that whilst the rationale is to preserve and promote the indigenous culture, once film makers are freed from competing on a level playing field with Hollywood, they tend to make low grade pastiches of Hollywood productions. In the absence of subsidies they are pushed to find niches that Hollywood doesn't fulfill and actually begin to reflect a distinctive national culture.