Source: ASAC/La Biennale di Venezia


An overhaul of Australia’s production incentives is provoking controversy among some of the country’s highest profile, internationally facing filmmakers who fear their films might not get made under the changes.

The Producer Offset (PO) tax rebate has been set at 40% of eligible costs for features and 20% for television drama for more than a decade. But from July 1, 2021, among other policy changes, a 30% rate will apply to both and Screen Australia will get an additional $22m (a$30m) over two years for Australian content.

The uncapped 40% PO has been claimed by everything from ultra-low-budget films through to Baz Luhrmann and George Miller’s big-budget productions funded by the US studios. Sue Maslin, producer of local hit The Dressmaker, says the policy shake-up will be a “death sentence” for what is the “toughest and riskiest screen content to produce”.

“[It] brings an end to producers continuing to invest our time, money, blood, sweat and tears in developing features, and forces us to focus on digital platforms in an unregulated environment where, to date, no viable business model has emerged for small- to medium-sized producers and there is minimal commitment by streamers to commissioning Australian content,” adds Maslin.

Increasing the financing gap for all films by reducing the 40% PO to 30% is not the only change: the minimum qualifying Australian production expenditure (QAPE) for the PO is also rising from $360,000 to $719,000 (a$500,000 to a$1m). According to Maslin, who produces primarily documentaries, the numerous docs made for less than $719,000 (a$1m), including her own, will be collateral damage because they will no longer be able to claim the PO. Further changes see producer overheads and expenditure incurred overseas excluded from QAPE — making life tougher for films on a similar level to the likes of Oscar-nominated Tanna, The Rocket, Sherpa, Buoyancyand many documentaries.

Producer Emile Sherman of See Saw Films says his company’s 2016 feature Lion— the most successful locally produced independent film in decades, which had significant portions set in India — would probably still have been made under the new funding regime but more cheaply. “We may not have had the money to pay for name supporting cast like Nicole [Kidman] or Rooney [Mara],” he says. “And we would have had to reduce the scope and scale, which may have meant the film missed the bull’s eye in the international market.”

Goalpost Pictures managing director Ben Grant says the market should step up as long as content is world-class. “Of the 15 projects we’ve made in the last decade, we’ve raised about $123m [a$170m] and spent about $101m [a$140m] in Australia, $31m [a$43m] of which was Producer Offset and $15m [a$20m] of which was Screen Australia funding.”

Most are features and include The Sapphiresand two US co-productions, The Invisible Man and Upgrade. Grant estimates they generated 7,000 jobs. “If our production data is replicated by other independent producers, it is clear evidence of a maturing of the industry in the last decade.”

Yet another change is that features no longer require a theatrical deal. One Australian distributor, who did not want to be named, voiced approval claiming some sub-par films are being released in theatres in order to secure the PO: “Cinemas should be a distillation of the best of the best.”

Lure of television

By increasing the funds available to television, it is hoped higher production values will equate to stronger international sales potential. More television production would be welcome but network quotas have been relaxed and the streamers remain unregulated, says the distributor. He also fears the “calling-card films” of new talent will be lost on digital services rather than shining on the festival circuit. Citing the example of Shannon Murphy’s Babyteeth, he suggests it is likely the film would still have been made but the way in which such titles are distributed for maximum impact could suffer.

Screen Australia CEO Graeme Mason cannot say specifically how the agency will spend the windfall that will give it a $71m (a$98m) budget in 2021-22, but expects fewer projects will get more money in order to give them scale and ambition. The agency invests in film, television, online content and documentary, and its investment sits alongside the PO.

Over the last several years, Mason has been critical of producers focusing on features. He believes most stories connect with audiences through the small screen, and Covid-19 has exacerbated independent films’ global struggle to reach cinema audiences. While he is adamant he does not set policy, which is in the hands of government, it is impossible to believe he does not have influence.

“It is outrageous that people are not clocking [the PO] will still give them 30%, and Sally [Caplan, Screen Australia’s head of content] might give them another 10% and a state agency 5%-10%,” says Mason. “That’s a lot of [public] money and there’s still a distributor, post company and international sales advance. Every single person in the US starts with nothing. I’m not saying it’s easy, but…”

On average, over the past five years, some 41 feature films have been made per year in Australia. Screen Australia put $17m (a$24m) into 20 of the 33 films made in 2018-19. Generally, Screen Australia funds and the rebate are not allowed to amount to more than 65% of the total budget. In 2019-20, a total of 151 projects were given the go-ahead to claim $142m (a$196m) on the PO — although how much will go to film and how much to television is not available.

Phil Hunt, co-managing director of UK-based financier Head Gear Films, has been involved in about 70 Australian films, including Cargoand Animals, and is concerned far fewer films will be made under the new financing structure, to the detriment of wider culture. “Storytelling means we can understand and accept each other, so we can live in a world that is coherent and cohesive,” says Hunt. “In the years to come, there will be far fewer Australian stories in the world.”