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Taxpayer dollars head to Hollywood

The federal government has just finished a review of federal film financing arrangements — and given itself a rather large pat on the back. The result is an endorsement of film financing arrangements in which more and more taxpayers money is being given to Hollywood studios.

Confirming Sir Humphrey Appleby’s famous principle that you should “never commission an inquiry without knowing the outcome first”, the federal Arts Department’s 2010 Review of the Australian Independent Screen Production Sector makes a series of rosy findings about the state of the sector and the effectiveness of the government’s Australian Screen Production Incentive, a large tax refund to film producers.

More money is certainly leaving Treasury coffers: the report states that “in the three years since the introduction of the Australian Screen Production Incentive, the government has provided $412.1 million in support through the tax system, compared to $136.7 million in the three years before the package.”

But delve further into the report, and all sorts of questions start to pop up. First and foremost is the crucial question of whether those extra taxpayer dollars are really stimulating an upswing in domestic production across the board, or merely co-financing large Hollywood studio films such as Happy Feet 2 and Australia.

Arts Minister Simon Crean trumpeted the review’s findings. “The boost in government funding is a great achievement and contributing to the viability of the local film production industry,” he announced in a media release.

Although it’s still early days, the increase in activity, particularly the production of Australian large budget films, such as Baz Luhrmann’s Australia and George Miller’s Happy Feet 2, and the box office performance of films such as Tomorrow, When the War Began shows the government support for the sector is having a significant impact.”

In fact, a close reading of the review suggests that the effect of the new funding arrangements is far less positive than the minister and the department claim. Much of the extra money — $169 million, in fact — has gone to foreign movie studios in the form of international production subsidies, though that’s not a fact that the review chose to highlight. But despite this, levels of foreign production in Australia have actually been falling, as the strengthening Aussie dollar and strong competition from other countries and locations have made the foreign production incentives less attractive.

More private investment has been attracted to Australian feature films, however, and more films are being made. Despite this, the domestic box office takings of Australian feature films has risen only slightly, from 3.8% between 2005-2007 to 4.4% in 2008-2010. That’s better than the subterranean levels of 2004, but still worse than the performance of Australian features in the early 2000s — let alone the 1990s.

As for television, the report found that while drama budgets had increased, total hours for Australian-produced adult television drama had remained steady. The reason? Television production is driven by local content quotas. To quote the report, “Australian television production levels remain stable over time and are closely linked to requirements under the Australian Content Standard.” In other words, the television networks are receiving more taxpayers money to produce drama that they are required to by the regulations. It’s a nice deal if you can get it.

Most of the money continues to flow to the big productions, such as Luhrmann’s upcoming Great Gatsby. These are loved by the industry, as they provide lots of employment for local casts and crew. But the review points out that a large part of the Australian screen sector is made up of small companies, many of which produce documentaries. These smaller firms have struggled to access the tax refunds, owing to high production thresholds. Features and documentaries made for less than $1 million or $250,000 respectively are ineligible for the offset, ruling out a large swathe of the independent sector.

Yet the review thinks this is a good thing, as it precludes the low-budget and arthouse features and documentaries that would be unlikely to make a return in any case. “Lowering the offset threshold for feature films to ensure access for emerging producers would to an extent alter the intent of the offset,” it says, “from one encouraging commercially focused features, to one that includes films less likely to be market and box office driven.”

The review confirms a subtle shift in Australian screen funding priorities away from backing emerging film-makers and new voices and towards big budget, Hollywood-financed productions. This may result in bigger box offices for bigger-budget Australian films — or it may not. The federal government’s last effort at supporting commercial film finance was the Film Film Corporation, a 20-year initiative that acted as a for-profit investor in feature production. The FFC lost more than a billion dollars in that time-frame, booking investment returns of negative 80%.

The new policy gets around this problem by simply giving tax refunds to big producers, regardless of how much money their film eventually makes. And it’s uncapped and open-ended: the bigger the budget of the film, the larger the taxpayer contribution.

3
  • 1
    Vincent O'Donnell
    Posted Friday, 4 March 2011 at 12:36 pm | Permalink

    Actually, the decade of the 1980s saw the best box office performance by Australian films since the renaissance of the 1970s. In two years the Australian slice reached 20 per cent and in a two further years topped 10 per cent. The turing point was 1988, coincidentally at least, the year the Australian Film Finance Corporation came on stream marking a policy break with the past and new funding models.

    From there box office performance was a stright line down to around 1 per cent in 2004, with just a blip in 1996 for Strictly Ballroom and The Adventures of Priscilla, Queen of the Desert.

    The question remains: is government support to maintain a film industry in Australia or build an Australian film industry.

    At the moment government policy is supporting the former, at a real cost to Australian culture.

  • 2
    zut alors
    Posted Friday, 4 March 2011 at 2:18 pm | Permalink

    This seems to be the norm in the 21st century ie: corporations and their associated heavies take the cream while the little bloke struggles for survival. Is the gap getting worse across the board or is it merely my imagination?

  • 3
    Surashen
    Posted Monday, 14 March 2011 at 10:06 am | Permalink

    there is actually an Australian indie TV production i would like you guys to give coverage to. their cast is a good Aussie cast with one Brit in there too, and the teaser they have released looks soooooooooo interesting compared to what’s on TV atm. anyway i love you blog and would love to see this get some coverage (yes i know the people involved) – seriously take a look – oh and they have a party on the 31st as a fundraiser with media welcome. go Aussie tv!

    http://www.deadside.tv

    peace,
    surashen

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