The Australian government has revealed a new refundable tax incentive that gives certainty and flexibility to those wanting to shoot sizeable features, mini-series and tele-movies in the territory. It has also increased local funding to the tune of $48m for the next four years.

For international productions, the government has announced that, on completion, producers will be able to get back 12.5% of what they spend in Australia, providing it is $7.8m (A$15m) or more, although what type of expenditure exactly qualifies is yet to be determined.

The Australian Government was never going to allow big-spending offshore production to disappear because of the actions of the independent Tax Commissioner. But in fixing that problem, it has also been careful not to alienate Australian filmmakers. It has therefore also promised to phase in funding increases of $48.4m (A$92.7m) over four years for the locals.

Most of these direct grants do not kick in until June 2002 - and the Coalition Government may not hold on to power in the looming election - but by 2004/5, they will represent an increase of 25% on 2001/2 expenditure. The new money is spread between feature development, television drama production, documentary, training and facilities.

The refundable tax offset should also make it easier to greenlight bigger budget Australian films. Any films with Australian expenditure between A$15m and A$50m will have to spend at least 70% of their total budget in Australia to qualify but this requirement does not apply where Australian expenditure is over A$50m. Where A$100m is spent on qualifying Australian expenditure, for example, the offset amount is A$12.5m. If the film's producer has company or other Australian tax liabilities of A$2m, he or she would receive a payment from the Australian Tax Office for A$10.5m after meeting the certification requirements.

Communications Minister Senator Richard Alston said the Government would implement the new incentive as quickly as possible and any film currently in production could apply. Tax-based concessions will remain in place but simultaneous access to both schemes is disallowed. Alston says the initiative will enable Australia to again compete with countries attracting 'runaway' productions like Canada, the UK and Ireland.