Film and arts


Budget Review 2011-12 Index

Budget 2011–12: Film and arts

Dr John Gardiner-Garden

Film

The Government’s film and television initiatives in the 2011-12 Budget amount to a $56 million funding boost over four years.[1]

Background

When it comes to Commonwealth support for film production, concerns are often expressed that the criteria for eligibility are too generous and that open-ended tax incentives to overseas productions can forgo and drain revenue without permanent benefits to Australia. This was the case in the early 1980s when the cost to revenue of film production tax incentives was rapidly increasing, and it prompted a policy shift in the late 1980s away from tax concession to film bank models. Following a policy shift early last decade back in favour of tax instruments (this time a range of tax offsets) concerns have again been raised.[2]

The Government, however, in this Budget, appears to have balanced these concerns against other considerations. These include the impact the high Australian dollar is having on the flow of production work into Australia, reported job losses in the Gold coast film industry, and a campaign by industry stakeholders (which included a 9500 signature petition) calling for an increase in film production tax offsets. The Governments initiatives were also a response to a recent review which found that, yes, the cost to government is increasing:

  • 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
  • The strong uptake of the Producer Offset alone has provided $266.63 million in indirect Government support to the end of 2010, and the Location and Post, Digital and Visual Effects Offsets have provided $67 million in support [3]

but

  • Early signs show that the Producer Offset is encouraging domestic feature film production, with total [Australian feature film] production expenditure in 2009–10 of $265 million representing an 88 per cent increase above the five-year pre-Producer Offset average.
  • In 2009–10, total production expenditure in Australia [Australian feature film and television drama together with international activity] was a record $731 million, well above the five-year pre-Producer Offset average of $547 million.
  • The Producer Offset is encouraging increasing interest in Australia as a co-production partner.
  • There are indications that the Producer Offset is having a solid impact on television production.[4]

The review also found that the industry expressed concern about the timing of payments through the tax system and the administrative burden in applying for the offset, especially for non-feature documentary productions. It also noted that while the Government’s international film tax offsets attract large-budget offshore productions to Australia, the evidence indicates that the success of the Location and Post, Digital and Visual Effects (PDV) Offsets is closely related to global financial circumstances, the exchange rate and competition from incentives available in other countries.

The Government’s Initiatives

The $56 million funding boost over four years is made up of:

  • $2 million to the Australian Bureau of Statistics and Screen Australia to conduct a screen industry survey and deliver the latest comprehensive data on the sector
  • $11 million for direct funding from Screen Australia to documentary producers with projects under $500 000 (thus reducing the administrative burden on these producers) and
  • $43 million dollars for changes to production incentives which include:
    • lowering the eligibility threshold for the Producer Offset eligibility for feature films, television and online programs from $1 million to $500 000
    • increasing the PDV Offset to 30 per cent of qualifying Australian PDV expenditure worth $8 million over four years
    • expanding the eligible expenses under the Producer, Location and PDV Offsets with the intention of benefiting all screen formats by allowing for the claiming of relevant insurance, legal, auditing and company fees, marketing, distribution and carbon offsets expenditure
    • removing of the 20 per cent cap on 'above the line' qualifying expenditure under the Producer Offset
    • extending eligiblity for the Producer Offset to short-form animated documentaries
    • allowing 65 hours of programming to be eligible for the Producer Offset, rather than 65 episodes
    • allowing official co-productions to claim relevant expenditure on foreign studio shoots under the Producer Offset, and
    • increasing the Location Offset rebate to 16.5 per cent and allowing international productions to claim additional insurances and legal, auditing and company fees as qualifying expenditure.[5]

Nearly all the cost of the above changes will be offset by $48 million in savings over four years from 2011–12 by removing Goods and Services Tax (GST) amounts from expenditure qualifying for the film tax offsets and increasing the minimum expenditure thresholds for documentaries to $500 000 in production (from the current threshold of $250 000).[6]

Arts

The Government’s wider arts initiatives include $10 million over five years for the Australia Council to fund up to 150 additional artistic works, presentations and fellowships over the next five years through the New Support for the Arts program.[7] The program will provide grants of up to $80 000 for new work, grants of up to $50 000 for presentations to Australian audiences, and fellowships for young and emerging and mid-career artists. This commitment comes in the context of some years of funding for the Australia Council which has not kept up with Consumer Price Index increases, leaving the agency with a grant fund of steadily diminishing value, and in the context of a raising of the efficiency dividend which will cost the Australia Council $3.3 million over forward estimates (and make significant demands also on the budgets of national collecting agencies such as the National Film and Sound Archive, National Gallery, National Library and National Museum).[8]

Of some relevance also to the arts is the Government’s commitment of $6 million over three years to a joint national program of activities to celebrate the Centenary of Canberra in 2013. The activities will include cultural, sporting and civic awareness events.[9]



[1].       S Crean (Minister for Regional Australia, Regional Development and Local Government, Minister for the Arts), $56 million support package for the film and television industry – Federal budget 2011, media release, 10 May 2011, viewed 11 May 2011, http://www.minister.regional.gov.au/sc/releases/2011/may/sc056_2011.aspx

[2].       See for example, A Crook, ‘Secret $40 million windfall for Great Gatsby despite no koalas, kangaroos’, Crickey web-site, 22 February 2011, viewed 16 May 2011, http://www.crikey.com.au/2011/02/22/secret-windfall-for-great-gatsby-despite-no-koalas-kangaroos/ and G Jenning-Edquist, ‘First Gatsby, now Miller... how American stories win Aussie film funds’, Crickey web-site, 15 March 2011, viewed 16 May http://www.crikey.com.au/2011/03/15/first-gatsby-now-miller-how-american-stories-win-aussie-film-funds/

[3].       Australian Government, 2010 review of the Australian independent screen production sector, Commonwealth of Australia, February 2011, viewed 11 May 2011, http://www.arts.gov.au/__data/assets/pdf_file/0003/94287/screen-sector-review.pdf

[4].       Ibid.

[5].       $56 million support package for the film and television industry – Federal budget 2011, media release, op. cit.

[6].       Australian Government, Budget measures, budget paper no.2: 2011–12, Commonwealth of Australia, Canberra, 2011, p. 285, viewed 11 May 2011, http://www.budget.gov.au/2011-12/content/bp2/html/bp2_expense-18.htm

[7].       S Crean (Minister for Regional Australia, Regional Development and Local Government, Minister for the Arts), Targeted funding for arts programs, media release, 10 May 2011, viewed 11 May, http://www.minister.regional.gov.au/sc/releases/2011/may/sc055_2011.aspx

[8].       Australian Government, Portfolio budget statements 201112: budget related paper no.1.15A: Prime Minister and Cabinet Portfolio, Commonwealth of Australia, Canberra, 2011, p.88, viewed 11 May 2011, http://www.dpmc.gov.au/accountability/budget/2011-12/docs/PBS_2011-12_ausco.pdf  

[9].       Budget measures, budget paper no.2: 2011–12, op. cit.


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