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International film investment in Australia: the Location Incentive Funding Program


The Australian Government has recently announced funding of $140 million over four years from 2019–20 to establish the Location Incentive Funding Program. A total of $35 million will be made available each year to ‘attract international investment to sustain Australian jobs in the film production and related industries’. This money will be administered through a competitive incentive program and will support, on average, two to three large budget international productions each year.

The new Location Incentive Funding Program will complement the Location Offset, one of three existing tax incentives for screen production introduced in the 2007–08 Budget by the Howard Government. The other two incentives are the Producer Offset and the Post, Digital and Visual Effects (PDV) Offset. Collectively, these three offsets are known as the Australian Screen Production Incentive.

The Location Offset provides a refundable tax offset for the cost of making a film in Australia where the company’s Qualifying Australian Production Expenditure (QAPE) is at least $15 million. The amount of the offset is currently set at 16.5% of QAPE. The Location Offset is intended to attract large budget international film and television productions to Australia by providing a rebate to foreign-owned production companies. It does not apply to foreign investment in Australian productions.

The new Location Incentive will ‘effectively’ increase the Location Offset rate from 16.5 per cent to 30 per cent for ‘eligible large budget international productions that film in Australia from 1 July 2018’. While the rebates available under the new Location Incentive are capped at a total of $35 million per year, eligible productions that are not successful in receiving a Location Incentive grant will still be able to access the Location Offset at 16.5%, for which there are no limits. It is also likely the same eligibility criteria that currently applies to the Location Offset will be applicable to the new Program (although there may be additional requirements; details will not be finalised until 1 July 2018).

Various recommendations have been made over many years to increase the Location Offset to 30%, ranging from the industry-government partnership Ausfilm in 2011 to a March 2018 report commissioned by the Australian Screen Association to identify and quantify the various impacts of film tax incentives in Australia. While productions seeking the Location Offset do not have to satisfy a ‘significant Australian content’ test to determine, for example, whether a production is sufficiently ‘Australian’ in terms of ‘subject matter’ and ‘the nationalities and places of residence of the persons who took part in the making of the film’, the perspective from Government and key industry stakeholders is that large, international productions of scale will have economic, technological and industrial benefits for the Australian film industry and also more generally for the Australian labour market.

Federal governments have in the past provided extra one-off support to top up the Location Offset to 30% for foreign films produced in Australia—for example, $12.8 million provided by the Gillard Government in 2012 for the film The Wolverine (2013) and a rebate recently provided by the Turnbull Government in order to secure the shooting in Queensland of blockbuster Hollywood films Thor: Ragnarok (2017) and Aquaman (2018). However, critics of this discretionary top-up funding have claimed that it ‘can be slow to be granted, and the selective nature of the decision creates uncertainty, which presents a major challenge for productions wishing to use Australia’s locations and facilities’.

An inquiry conducted in 2017 by the Standing Committee on Communications and the Arts into the Australian screen industry concluded that 16.5% ‘is no longer competitive with other jurisdictions such as the UK, parts of Canada, and New Zealand’ and recommended that it be raised to 30%. It stated further that this would ‘eliminate the need for top-up grants and provide more financial certainty to overseas product companies considering Australia as a destination’.

The Location Incentive Funding Program may also help further develop what film scholar Ben Goldsmith has referred to as the ‘new outward-lookingness of Australian cinema’. He says that since the late 1980s the Australian film industry has become increasingly internationalised. Goldsmith cites the building of sound stage complexes along the eastern seaboard—in Queensland in 1988, in NSW in 1998, and then in Victoria in 2004—as one of the factors contributing to this internalisation.   

Other film scholars, such as Adrian Danks and Con Verevis, have suggested that the internationalisation of the Australian film industry has been particularly acute over the past fifteen or so years. They argue that in talking about Australian film today we have to consider:

overseas financed and conceived films shot in Australia, films that ‘imagine’ Australia from a significant distance, films that rely heavily on international models of production and genre, truly independent or transnational films that emerge from particular developments in international relations, international or even ‘foreign’ films that feature significant Australian personnel, and films shot within large studio complexes that just happen to be situated on Australia’s eastern seaboard.

In terms of government policy, Goldsmith suggests that since the early 2000s there have been tax incentives and other ‘film friendly’ initiatives that have increasingly orientated ‘the vision of cinema outward, rather than simply conceiving films that look inwards towards the geographic and imaginary interior of Australia as the entirety of Australian cinema’. In other words, the flows between the national and international have increasingly involved lines of economic and cultural connection that have ‘transformed the ways in which we might think about what constitutes Australian cinema’. This in part reflects the policy settings of the last seventeen years, beginning with the Refundable Film Tax Offset for Film Production in Australia in 2001 by the Howard Government, designed to attract large budget international films to Australia.

 

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