this week reported that Ryan Kavanaugh's Relativity Media is teaming up with Citigroup Corporate and Investment Banking to co-finance approximately 45 films from an as-yet-unnamed Hollywood studio over the next five years. Following the parameters of recent co-financing equity structures with Hollywood, as much as $1.1bn could be invested in a slate via a revolving credit line from Citigroup.

It's confirmation that, for now, private equity money from around the world still loves the film world.

But investor confidence is far from universal. In much of Europe, it's not film per se but the tax breaks and the tax loopholes that attract the money rather than the business itself. Where gaping loopholes exist, there's boom - back in 2004, the holes in the UK tax incentive meant investment of $802m (£409m) flowed through the system, up 83% on the year before.

When the government caught up with what was happening, the tap was swiftly turned off. The conclusion seems to be that film attracts private equity when accountants find ways of playing the system, not films themselves. And so, we've been in thrall to a boom and bust, gold-rush mentality, dreaming of new riches lying hidden in some tax loophole into which film can dip - or indeed double dip.

Before we get too po-faced about the point, it's worth remembering that many good films have been made with bad money. Dodgy dealing, dirty deeds and sharkish behaviour have been responsible for great art since the first Pharaoh thought a pyramid might be the perfect send-off to the afterlife. Many of the greatest films in history would have been lost without a sizeable bending of the rules.

So why should Screen International be coming over all Mary Poppins about opportunities for cash' Well, that comes down to one's view of the future of film. If the option for substantial growth in independent film in Europe is really dependent on an accountancy arms race with governments on tax breaks, then we might as well pack up the cameras now.

When the loophole is more important than the product, there's little hope for growth, and in this post-Enron world, governments are far less likely to leave the back door unlocked for the smart or unscrupulous to steal in.

And so the question posed by investors is only fair: tell me why I should put my money in film' It's a question the industry does need to ask itself.

The criticisms levelled by investors are often valid - that production budgets are too arbitrary and often do not start with a sense of the potential demand of audiences.

Distribution and marketing too often remain a secondary consideration to production. Efficiency of distribution and a willingness to offer investors more insight into their accounting and revenue allocation models are among the reasons US studios and the bigger US independents have been so much more attractive to investors.

An important part of the equation will be smart media businesses able to mobilise finance with large slates to reduce risk and with the expertise to piece together funding from tax and other government sources.

Another will be the young multimedia entrepreneurial film-makers who will find investment and audiences without the remotest interest in the idea of the greater good of a 'film industry'. We have the potential for a multimedia mixed economy, but it will take a force of will to get there.

The starting point must be to see tax breaks and subsidies as, at best, a useful support to the main plan. Tax regimes, and indeed private equity booms, come and go and no-one can pretend that a reliable climate for film investors is easy to create.

But waiting for the next big loophole boom is a dead end, which will do nothing to build that sustainable business. See page 6 for more.