When production on Warner Bros' superhero project Justice League Of America (working title) wraps shooting next year, director George Miller hopes that, for once, the project's many Australian crew members will not have to move abroad to continue working. That is also the reasoning behind Australia's revamped tax incentive for film producers which aims to attract major international projects while also boosting local production.

'What the government is trying to do is build a whole bunch of companies that are going to continue doing production,' suggests Miller. 'On Justice League, Sydney-based Kennedy Miller Mitchell are the producers, we have final cut, and profits will come back into the country.'

Miller says he remains 'heartsick' that local animators and crew members who developed skills working for four years on his animated film Happy Feet at Fox Studios in Sydney between 2001 and 2005, could not then find work at home.

The Australian film industry is in the middle of its biggest shake-up for two decades. Public subsidy has taken a back seat in favour of producer-led tax rebates. Every film that qualifies as Australian and spends more than $920,000 (a$1m) in Australia is able to claim back 40% of that expenditure. The rebate has been giving back 15% of Australian expenditure to non-Australian producers since 2001.

What is more, from July 1, 2008, the Film Finance Corporation Australia (FFC), development agency the Australian Film Commission, and documentary production house Film Australia, are being merged into a new super agency, Australian Screen, that will administer the tax credit. (Until then, the FFC has a total of $18m in subsidy to hand-out to Australian producers in December and April.)

The goal is to make bigger Australian films with the potential to reach a larger audience. Right now, only one or two Australian films each year are made with budgets over $9.2m (a$10m). More than half are made for less than $2.8m - and commercial success is rare.

As it does in the UK, Hollywood looks to Australia for talent and ideas. The new incentive is likely to pave the way for an influx of US-Australian collaborations shooting down under. Twentieth Century Fox is already gearing up to shoot Wolverine alongside Warner Bros' Justice League at the Fox Studios in Sydney early next year. Like Justice League, Wolverine will be produced by a local outfit, star Hugh Jackman's Sydney company Seed Productions.

The exact criteria for what will qualify a project as Australian are due to be announced this month, but the nationality of the finance and copyright owners will not be taken into consideration. 'A holistic point of view has to be taken in determining whether a film qualifies or doesn't,' says Brian Rosen, chief executive of the FFC. The mere fact that a script and a director may be foreign does not mean it is excluded. But you would want to make sure that everything else had a hell of a lot that was Australian in it.'

Australians must benefit financially from a film's success, Rosen insists. One film likely to benefit from the tax incentive is Baz Luhrmann's Australia, a sweeping romantic period film starring Nicole Kidman and Hugh Jackman, and financed by Fox. Production has just wrapped on the estimated $110m project which shot in the dramatic and desolate landscapes of northern Australia.

While Australia has many clear Australian elements, some local producers are concerned Hollywood will be the major beneficiary of the new financing mechanism.

'The answer to what constitutes an Australian film is only going to be built up by precedent,' says Greg Smith, an executive with Animal Logic, the digital production house that worked alongside Miller on Happy Feet and is now moving into production. 'That is where it is going to be difficult for the people charged with implementing the legislation: they are going to have to be fully aware what precedents they are establishing.'

Animal Logic has a non-exclusive development deal with Warner Bros for the co-development and co-production of animated features and could gain much from the rebate.

'We were always going to make Australian stories with global appeal and this rebate encourages us to identify and develop creative Australian partnerships rather than looking for them offshore,' says Smith.

Major Sydney-based post-production company Omnilab is another company whose existing plans will be enhanced by the new financing mechanism. Inspired by the Lionsgate model, it has begun producing films and investing in productions in Australia and abroad, including Roger Donaldson's US thriller The Bank Job. It also aims to move into sales and distribution.

'If the rebate had not come in we would probably be doing a few more international films than Australian,' says Omnilab executive David Whealy.

Graham Burke, managing director of Australia's biggest entertainment conglomerate, Village Roadshow, says it plans to shift its production focus to Australia: 'We see this as an opportunity both to make money and to put something back into an industry that has been damn good to us.'

The new rebate is expected to enable internationally proven Australian directors - the older generation such as Fred Schepisi and Peter Weir, and the younger such as PJ Hogan and Gregor Jordan - to make more films at home. It is not that they never work in Australia - Philip Noyce made Rabbit-Proof Fence in the territory and Gillian Armstrong recently locked off Death Defying Acts - but it is rare.

Bruce Beresford and Jane Campion are in pre-production on Australian films Mao's Last Dancer and Bright Star respectively, while twin brothers Michael and Peter Spierig are shooting their horror film Daybreakers. They are among the last projects supported by the FFC. Bright Star will be able to claim some of what it spends in Australia but Mao will not because it is financed under the old 10BA tax-based system - which, like the FFC, is soon to be abolished.

Fred Schepisi is well into planning his Vietnam War story, the $22m (a$24m) Last Man. 'This scale of film shows why the rebate is so valuable,' says the film's producer Martin Brown. 'Before the rebate came in we were scratching our heads.'



The FFC was set to release the final rules governing how a film qualifies at time of press. Once announced, the corporation expects a flood of projects to apply for provisional certification. For a production to be eligible it has to spend at least $920,000 (a$1m) in Australia on making the film and international producers must be in co-production arrangements or working on films deemed to have Australian content. Once this has been achieved and the film is completed, the FFC will issue a certificate verifying that it is Australian. The Australian Taxation Office will then determine how much is reimbursed once the producer submits the tax return.


In addition to the 40% rebate for producers, the Australian government is also introducing a new incentive to attract international projects to the country's post-production sector. Regardless of where a film has shot, any project spending more than $4.6m (a$5m) on post, digital and visual effects work in Australia, will be able to offset 15% of its spend. Until now, projects were only eligible if they had shot in the territory.

'All signs point to a very strong uplift in work as a result of this,' says Tony Clark of Rising Sun Pictures, the Sydney visual effects house now busy with Baz Luhrmann's Australia, DreamWorks horror The Ruins and Spike Jonze's drama Where The Wild Things Are, backed by Warner Bros.


- A 40% offset for Australian films and a 15% offset for offshore post, digital and visual effects work was introduced on July 1, 2007. The location offset for foreign films shooting in Australia rose to 15%.

- Until it closes its doors on June 30, 2008, the FFC is administering the 40% offset, and co-investing in films intending to claim the offset.

- Screen Australia will replace the investment functions of the FFC from July 1, 2008, incorporating the functions of the Australian Film Commission and Film Australia, and administering the offset.


Producers look beyond the rebate

Even without the incentive, Australia is an attractive international location. Warner Bros' action romance film Fool's Gold, starring Kate Hudson and Matthew McConaughey, and Walden Media's fantasy adventure Nim's Island, starring Jodie Foster and Abigail Breslin, have both recently completed shooting at the Warner Roadshow Studios in south-east Queensland. They will still be able to take advantage of the 15% location tax offset.

Nim's producer Paula Mazur told delegates at the Australian International Movie Convention in August that her 'production gut' told her that Australia was the best place to shoot Nim's Island when she read the novel on which it was based.

'When I came to investigate it, it bore that out: you have a great film-making infrastructure, depth of crew, the tropical look we needed, and a studio,' she said. 'It has been fantastic to be here in Australia.'



Innovative UK producer-distributor Mark Herbert of Warp X is one of the headline speakers at the annual conference of the Screen Producers Association of Australia (Spaa) from November 13-16. Herbert is in town to talk about the methodology behind his low-budget initiative.

One of this year's Spaa conference sidebars is the Australia/Asia Co-Production Connection. Producers will be coming from China, India, Korea and Singapore to pitch for Australian partners. The business models that emerge will be fed into the main conference. A delegation from Canada is also attending.

The financing market SpaaMart will run parallel to the conference with 11 Australian and New Zealand projects being presented, including new projects from Fred Schepisi and Tony Ayres (Cut Snake).On the first morning of the conference Spaa will hand out awards to its producer members and the three days will be book-ended by two unrelated awards nights: the inaugural Asia Pacific Screen Awards on November 13 (see p20) and the Inside Film Awards on November 16.


The Boys Are Back In Town

Scott Hicks' Australian- UK co-production stars Clive Owen and is set to shoot in Queensland next year. Financed by the FFC, the project is a comedy drama about a sportswriter thrust into single parenthood. Produced by the UK's Tiger Aspect Productions and local outfit Southern Light Films, the project is Hicks' first in Australia since his 1996 break-out Shine. Hopscotch has Australian rights.

Int'l sales: Capitol Films, (44) 207 298 6200

Bright Star

Jane Campion's drama about English poet John Keats and his lover Fanny Brawne stars Ben Whishaw and local rising star Abbie Cornish. It will be mainly shot in London next year and is set up as an Australian-UK co-production. Hopscotch has Australian rights.

Int'l sales: Pathe Pictures International (44) 207 323 5151

Mao's Last Dancer

One of Australia's most prolific directors, Bruce Beresford (Driving Miss Daisy), and producer Jane Scott (Shine) are in London this autumn casting Mao's Last Dancer, a drama based on the autobiography by Li Cunxin, who was taken from his peasant family to study dance at the Beijing Academy during China's Cultural Revolution.

Int'l sales: Celluloid Dreams, (33) 1 49 70 03 70

My Year Without Sex

Sarah Watt, whose debut film Look Both Ways was an international festival hit, is now working on this new project with producer Bridget Ikin. Genre-defying, My Year Without Sex is a darkly comic romantic drama about religion, sport, and sex. Shooting starts in Melbourne early next year. Footprint is distributing in Australia.

Int'l sales: The Works, (44) 207 612 1080.