Producers who hire Australian companies to do visual effects or other post-production work will be able to claim 30% back from the government.
The rebate was previously 15% but it was made known tonight, when the annual Federal Budget was handed down in Parliament, that the rate would double.
Films of any nationality are eligible, providing they spend A$500,000 in Australia, but companies such as Animal Logic, Rising Sun, Fuel, Digital Pictures and Deluxe Australia will be hoping to spark the interest of Hollywood because their films have money to throw around.
The Harry Potter films are the largest that have taken advantage of the PDV (post, digital and visual effects) offset to date.
Service companies are suffering because of a downturn in offshore work, principally because the strong Australian dollar has rendered local incentives uncompetitive. The Aussie dollar is currently worth US$1.08 dollar.
The real problem is the contraction in the number of features being filmed in Australia and many will be disappointed that no change has been made to the 15% location offset.
There have been no big-budget films since The Chronicles Of Narnia: The Voyage Of The Dawn Treader wrapped at the end of 2009.
The emergence of a few bigger Australian films due to the 40% producer offset for local pictures has relieved some pressure but not enough. Many hopes rest on George Miller’s Fury Road, a continuation of the Mad Max franchise, and Baz Lurhmann’s The Great Gatsby.
At the other end of the budget spectrum, producers will only have to clock up US$540,000 (A$500,000) in qualifying Australian production expenditure (QAPE) to claim the producer offset.
It was thought that the previous threshold of US$1.08m (A$1m) was inflating budgets and discouraging entrepreneurialism and bold new players. The Screen Producers Association of Australia has been lobbying for the change for several years.
A broader range of costs can also now be included in QAPE including insurances, completion bonds, and those associated with financing, audits and marketing.
While Australia has weathered the international financial downturn well, it has made many spending cuts, in part to afford the costs of floods and a cyclone early in the year, and to balance the books by the 2012/13 financial year. The most emphasis is being given to building Australia’s workforce through training so as not to waste “a single pair of capable hands”.