Tax assistance secures production of Happy Feet 2 in Sydney through Dr.D, director George Miller's joint venture with Omnilab media.

Happy Feet 2 is in production in Sydney, Omnilab Media confirmed today following a statement from the New South Wales (NSW) Government to that effect.

The NSW Minister for State Development, Ian Macdonald, said that the NSW Government has helped secure the sequel, and a new digital centre, through a 'payroll tax assistance package'.

However a spokesperson for the minister would not reveal the level of assistance, saying it was 'commercial in confidence'. It has also not been possible to confirm whether Warner Bros and Village Roadshow are again funding the sequel.

Precisely a year ago, Happy Feet director George Miller and dominant Sydney services and facilities supplier Omnilab announced they would create a digital media company. reported at the time that Happy Feet 2 was likely to be one of the company's first productions and subsequently revealed that the joint venture was to be named Dr D.

The financial incentive that has now been secured comes from a so-called industry attraction fund.

The fund was established to attract footloose projects and increase the state's share of production, generate employment, enhance skills and introduce new film-related technologies.

Happy Feet 2 will employ an average of 438 people over three years, including about 230 computer generated imaging artists.

As Macdonald said: 'This is all part of the State Government's ongoing efforts to support the NSW film and television production sector.'

A spokesperson for Omnilab said a number of projects were being developed at Dr D and new premises would eventually be found, but no building had been acquired or leased as yet.

'This incentive by the NSW Government is a significant step,' Miller commented in the Government's statement. 'It allows us to make Happy Feet 2 in Sydney and will be the first of many productions from our new digital studio, Dr D. It helps us in our attempts to attract substantial foreign investment which will create hundreds of high-end, highly skilled jobs as well as nurture the careers of many people coming out of our educational institutions who would otherwise have no place to grow their talents'.

Animal Logic, based at Fox Studios Australia, was the key service and infrastructure provider on the original hit film. It is now busy on Guardians of Ga'Hoole, its first animated film as a producer. Scriptwriter John Collee revealed last week at the annual conference of the Screen Producers Association of Australia that he was no longer working on the project because of creative differences between him and director Zack Snyder.