Screen Australia injects some flexibility into its co-production rules

She told ScreenDaily that Australia had to work harder at getting better at co-productions: “We need to get good at multi-party co-productions. Europe does them all the time while we are not accustomed to doing them.”

Co-productions are hailed as the holy grail in Australia because they are a potential pathway to more overseas financing, and automatically qualify for Australia’s generous 40% producer offset, thus avoiding the necessity to pass the usual local content test.

Under new draft guidelines Screen Australia can now provide producers with a “non-binding letter of preliminary compliance” before they lock down finance.

“I was very wary about allowing this because co-productions are like plasticine and change shape all the time but producers think it will help (give potential investors more certainty),” said Harley.

It is also now possible for a writer from outside the partner countries to contribute to a screenplay providing he or she is not a credited writer. Previously this would have immediately made the project ineligible.

Nothing has changed in relation to the legal and contractual complexity of co-productions but it should be easier to meet the rule about Australia’s financial contribution not exceeding its creative contribution by more than five per cent. By way of example, if 55% of the budget is from Australia, the points-based creative contribution must not be less than 50%.

There is considerably more flexibility under the proposed new system: a costume and sound designer can now score a point each, for example, as can a VFX supervisor. A producer can also opt for the nationality of the source material to be taken into account.

If adopted, points will be allocated as follows: (must be counted) writer 2, director 2, DoP 1, editor 1, up to four principal cast 4; (discretionary) composer 1, costume designer 1, production designer 1, sound designer 1,VFX supervisor 1, senior key role specific to the film, such as a fight choreographer on a martial arts film 1, underlying work 1.

Sixteen international co-productions have been made in the last five years, mostly with the UK.

Harley expects numbers to grow because of the number of new treaties in the works, the steady stream of enquiries from Australian producers, and the interest in Australia from abroad,.

Co-production arrangements are in place with the UK, Canada, Italy, Ireland, Israel, Germany, Singapore, China, France and New Zealand. Agreements with South Africa and Denmark are nearing completion and negotiations continue with India and Malaysia.

Screen Australia assesses whether projects can get co-production status and can qualify for the producer offset, which allows up to 40% of the Australian expenditure to come back from the Tax Office as a rebate. Up to now those two functions have been performed by different units but Screen Australia has revealed that this will not be the case from July 1.

Screen Australia emphasizes that co-productions do not get favourable treatment when applying for the limited direct investment available.