July 12
Gillard mulls tax help to revive film-making
Source: The Australian Financial Review
Date: 25th July 2012
Stroy by: Mathew Dunckley
A big increase in tax breaks for overseas studios and a rewrite of the rules covering foreign actors may be introduced to help the film industry, which has been hurt by the higher dollar.
Prime Minister Julia Gillard has given a strong indication that the government would reconsider the main tax break for foreign productions, the location tax offset.
Speaking on the set of The Wolverine, which is bankrolled by News Corp’s 20th Century Fox studio, Ms Gillard said the subsidy would be considered as part of a new national cultural policy to be released this year.
“We are at risk of those skill sets being dispersed around the world and importantly not bringing the next generation through,” she said.
The tax offset was raised from 15 per cent to 16.5 per cent last year. The industry wants it raised to 30 per cent in response to increases in the dollar which make it more expensive to film movies in Australia. The federal government made a $12.8 million cash payment to get The Wolverine, in effect raising government assistance to 30 per cent.
The executive director of the Screen Producers Association of Australia, Geoff Brown, said the group was “fully supportive of increasing the offset and we are expecting that it will be included at 30 per cent”.
Mr Brown said other countries offered greater subsidies.
The director of actors equity for the Media, Entertainment & Arts Alliance, Sue McCreadie, said an increased offset would be “the difference between productions coming and not coming” to Australia.
“The sooner the better, we need to give the signal to the studios that it is a strong possibility,” she said.
Ausfilm chief executive Debra Richards said the move would be “extremely positive” for the industry.
The chief executive of Melbourne’s Docklands Studios, Rod Allan, said there has not been a large foreign picture made in Victoria for three years.
“If [the offset] is not lifted, it will be very difficult to attract footloose production to Australia. Producers and studios say to use that Australia [is] so far out of the range that, in a lot of cases, they don’t even do comparative budgets for Australia,” he said.
Arts Minister Simon Crean is expected to put a proposal on the matter to cabinet soon.
The Wolverine star Hugh Jackman said a typical overseas production brought $100 million into the country and, of that, $20 million was returned to the government in tax.
“What these foreign or international films do, by having them here, [they] really can train so many people within the industry,” he said.
A review of the rules covering the use of foreign actors and crew is reaching a crucial stage. Industry talks are scheduled for the next fortnight.
Under the old rules, Mr Brown said that the union was in effect given the right of veto over the use of foreign actors, particularly in Australian films, even though the rules required only “consultation” with the union.
“We believe it has gone beyond consultation and gone into a kind of de facto approval or disapproval process which not what was intended,” he said.
Mr Brown said the union’s approach over the past six months had been “totally different” but experience showed the rules had to change.
The number of Australian actors permitted in films receiving direct government subsidy is at the heart of the ongoing dispute. Mr Brown said there should be recognition that local films needed foreign finance, which might come with a stipulation on the use of certain overseas actors. Asked if the union’s intervention had caused films to fall over, Mr Brown said: “There have been a few, yes”.
Ms McCreadie said the union had no problem with the fairly loose rules on overseas actors in foreign-backed films, such as those that would qualify for the location tax offset, but on local films that received public subsidies or the 40 per cent local producers tax offset, there needed to be rules.
“No one can get a film up without support from international investors, the condition of funding is sometimes marquee names, they can be Australians,” she said.
She said she was not aware of any situations where union objections had scuttled a production.
“We are flexible in exceptional circumstances [but] there is no point having guidelines if you take no notice of them,” she said.
“We are not trying to stand in the way of production happening we would always take into account all the circumstances of a production,” Ms McCreadie said.
Both sides expressed confidence they would reach consensus on most issues before asking the government to rule on any outstanding problems.
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