The government of the Australian state of Victoria brought a smile to the faces of filmmakers attending the opening of the Melbourne International Film Festival (MIFF) tonight, by pledging $2.3m (A$2.4m) to extend the life of the festival's investment fund and financing market.

'We were not certain that funding would be renewed,' said Mark Woods, manager of both initiatives, 'and that it was for two years was most definitely happy and surprising news.'

The four-day market is run under the 37South banner and started yesterday. Many more international companies are in attendance than in 2007, the inaugural year, and at least four - Bavaria Film International, Independent, Spier Films and Altadena Films - have come to Australia for the first time ever.

'We will keep working towards getting a mix of companies down here, those with a long-standing relationship with Australia and those who are new to this territory,' said Woods. 'With the new financial arrangements now operating (the introduction of the producer offset) we want more companies to sample what Australia has to offer and more are interested.'

While Woods can't take the credit, Altadena is negotiating for international rights to writer/director Belinda Chayko's second film, Lou, about a grandfather with Alzheimer's Disease who mistakes his granddaughter for the wife who abandoned him years earlier.

John Hurt has signed on as the grandfather, and Emily Barclay as the granddaughter's young mum. Michael McMahon and Tony Ayres are producing, Liz Watts is the executive producer and Kojo is likely to distribute locally.

The MIFF programme includes ten world premieres, six of which have investment from the Premiere Film Fund, including opening night title Not Quite Hollywood, a tribute to the Australian films of the 1970s.

All six happen to be documentaries. The additional six films that have investment from the fund will not premiere until next year. They include Sean Byrne's horror film The Loved Ones, Blessed from Ana Kokkinos, the musical Bran Nue Dae from Rachel Perkins, Robert Connolly's political drama Balibo and Fred Schepisi's Last Man .