Four films from Spain's biggest region, centered around Barcelona, unspool in official sections: Woody Allen's "Vicky Cristina Barcelona" out of competition; Annemarie Jacir's "Salt of This Sea" in Un Certain Regard; and Albert Serra's "El Cant dels ocells" and Lisandro Alonso's "Liverpool," in Directors' Fortnight.

Current Catalan cinema ranges widely: genre films ("The Orphanage," "REC") jostle with left-of-field auteur fare ("In the City of Sylvia," "Days of August") to classic arthouse ("Barcelona: A Map") and English-language productions (Brad Anderson's "Transsiberian").

For a European region, Catalonia's production is prolific, turning out 72 films in 2006, more than Sweden (48) or Belgium (46), and 75 in 2007.

But while the Catalan cinema industry might seem healthy to foreign eyes, the government is set to make a major overhaul.

In late February, film authorities unveiled state aid measures anticipating an audiovisual law that will go through parliament this year.

The main objective, explained Antoni Llado, Catalonia's film authority supremo, is to attract more higher-budget productions; to use more local talent in Catalan films; and to strengthen Catalan equity presence in co-productions.

To achieve this, the authorities have borrowed a classification system from the U.K. that rewards foreign shoots that use British talent.

The new Catalan regs follow suit.

Productions can pull in up to e200,000 ($319,400) in subsidies according to a sliding scalepoints system: Major points earners include: a Catalan-language shoot (45 points), Catalan director, screenwriter, score and d.p. (45 points all together), actors (34), and a local cultural contribution (24).

Also, to draw aid for co-productions under the new system, a Catalan company must take a minimum 50% stake in pics under e3 million ($4.8 million), and at least 20% in costlier co-productions.

These changes play off frustration among some authorities over the use of subsidies. Catalan aid is one of the most generous in Europe.

The 2008 film budget of the Catalan Institute for Cultural Industries (ICIC) -- the region's subsidy board -- is

e16.7 million ($26.7 million).

Catalan pubcaster TVC will plough a further e31.2 million ($49.8 million) into Catalan features, TV movies, docus and animation this year.

That's not far short of all the regional, county and local film aid in France: $80.9 million.

Yet the results -- at least for Catalonia's ruling ERC nationalists -- leave a lot to be desired.

Language barrier

Of 2007's 75 films, only 12 were made in Catalan, so ensuring the presence of local talent. And Catalan-language movies took just a 0.8% market share in the region.

The current system has allowed some films to be fully financed by ICIC coin, TVC money and a distribution advance.

And Catalan producers could draw state and TVC coin for minority co-productions with few Catalan elements to their name. Some 30 Catalan films in 2007 were minority co-productions.

"We want to stop being a preferential minority partner and start being majority producers. We want our companies to have a decisive presence in productions," says Ferran Tomas, director of the ICIC's Audiovisual Department.

But Catalan producers are worried. Their days of wide-ranging co-production freedom could soon be over.

"Giving priority to cultural content will only weaken co-productions," forecasts one producer.

"If there are fewer co-productions, how are we going to export our product?" asks another.

To prime international fare, the government announced a second batch of measures, prizing fest selection , and boosting foreign sales with a 15% top-up for non Catalan-language pics.

ICIC and TVC have created a e4 million ($6.4 million) fund to finance four Catalan-language films annually, flagships for the kind of films the authorities wish to support.

"The system's not so rigid. What you can't get with one subsidy line, you can get with the other. Films like 'Yo soy La Juani,' 'The Orphanage' and 'REC,' and auteurs like Serra actually gain from these measures," argues Xavier Parache, ICIC film/audiovisual finance director.

No free ride

A few provisional conclusions seem clear: Catalonia will no longer be a soft touch for co-productions, and there will likely be a dash to produce lower-budget, Catalan-language directors with festival appeal.

"The government might be encouraging more low-budget pics than it thinks, since the average cost of Catalan films is significantly below $4.8 million," says one producer.

Films like the Mideast-set "Salt" would have to be co-produced in the hope of fest berths and foreign sales.

The net effect of new subsidy systems is always difficult to forecast; many producers will wait to see how the new legislation really plays out.

In "El Cant del ocells," Albert Serra envisages the Three Kings of Orient giving baby Jesus gold, incense and myrrh. The Catalan government's proving lavish too. Whether its new offering will go down in history remains to be seen.