Failing Incentive

A Slight Uptick They Say

I wanted to bask in the warm afterglow of the Yankees’ World Series win a bit longer and leave that entry at the top, but reality beckoned. My reality is that I’m in Australia trying to make films. I’m pretty close to giving up. I’d rather be a day trader if it weren’t for the fact that super-fast computers would beat me out of my tiny war chest.

Anyhow, the reality as it stands is that the incentive package for the film industry has failed, according to the 2008-2009 production survey.

Only $23 million was claimed from 17 feature films applying for the new 40 percent Producer Offset, an incentive that was introduced largely to build bigger budget local films and sustain production companies. The Producer Offset was expected to spark production volume well beyond $100 million.

And the 15 percent location incentive for foreign features proved ineffectual with not one international production claiming the incentive.

Only six foreign feature films began filming in Australia in the financial year, for a total spend of only $2 million.

All six were Indian films and none spent enough to qualify for the Location Offset introduced in May 2007. Foreign feature production usually averages $98 million annually.

In 2008/09, the value of production activity, as measured by the portion of budgets spent in Australia, totalled $688 million, $365 million of which was for feature films.

But two major US-financed films, Warner Bros’ animated films, Happy Feet 2 and Guardians of Ga’Hoole, accounted for the majority of this sum, well in excess of $200 million.

Only three feature film co-productions were begun in the 2008/09, spending $17 million in Australia, below the five-year average of $25 million.

Nevertheless, Arts Minister Peter Garrett said “The results show just how strong our local film and TV industry has proved to be in the last year.”

Thanks Mr. Garrett, I feel so good about it all now… NOT. ScreenHub has an entry by David Tiley too:

Food for thought. We have an unstable international sales environment, the dollar is 20c too high, and the rebate is costing the Treasury interesting amounts of money. Direct investment by government in the sector is looking like chickenfeed compared to the indirect taxation support of the producers’ rebate.

From a politician’s point of view, all looks well – which is why Minister Peter Garrett is making happy noises.

However, the sector experiences microscopic effects which can make or break companies, careers and the future of Australian storytelling. Garrett has shown many times since he was elected that he understands the value of small amounts of money in strategic places, so he realises the level at which real change and stability is played out.

As we shift from direct to indirect support from government, we are left to wonder how those projects driven by art and culture are faring. Screen Australia is busily increasing support for development, and decreasing production investments. Either culturally valuable production is squeezed, or it too goes into the marketplace.

And this calendar year, a lot of films that the screen community is proud of, did much worse in the cinemas than we hoped. That surely adds up to a problem.

I don’t see the numbers the same way, but I’ll take it as read for the sake of the argument. The principle of the government pulling out of direct investment is without a doubt the right move. The problem that is not really discussed properly is how projects qualify for the indirect taxation support, and whether that is ever going to help the industry grow in this day and age. It may actually be a 1990s solution to a bunch of 2010s problems.

Colour me sceptical but I just don’t see the tax department suddenly changing its tune and getting behind Australian productions, after years of targeting films as tax dodges and coming up with bizarre reasons why a production wasn’t ‘Australian’ enough for them. One imagines that even if the system started to function, if it turned out that many films were getting up and failing, they’d run back to the government to slam the door. There’s simply not enough trust or respect in the equation. And that fact in the end might explain why the new system is failing thus far.

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Filed under Cinema, Film, Movies

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