With its recent introduction of a new scheme regulating the "refundable tax offset", the Australian government now anticipates that the level of runaway films shooting in Australia will increase to 10 per year within five years and have a total value of $440.3m (A$850m), with $253.8m (A$490m) of this spent in Australia.
Australian crews and facilities have serviced several high-profile US films such as The Matrix and Star Wars, but total numbers of blockbusters have always been low. In each of the last five years only two to five foreign films, with a total worth of $36m - $140m (A$70-A$270m), were shot in Australia. Judged on these latest predictions, 2005/06 will see twice the number of films than made in 2000/01 and they will be worth four times the value.
This crystal ball gazing is contained within the explanatory documents attached to the recently-drafted legislation that will provide producers of big budget overseas projects with savings of about 10% on total budgets, depending on what proportion qualifies as Australian expenditure (Screendaily Feb 12, 2002).
The documents reveal that the projected cost of the new tax offset incentive to Government is likely to be $18m (A$35.2m) in 2002/03, rising to $28m (A$53.4m) in 2005/06. Administrative expenses will add $2m (A$4m) over the next five years.
The notes make it quite clear that the intention of the new incentive is to attract high quality productions to Australia, rather than large volumes per se "which would have a concomitant impact on the local industry's ability to continue production".
A company must be either deemed an Australian resident or be permanently established in Australia to be eligible - many films go through the service companies attached to Fox Studios Australia and the Warner Roadshow Movie World Studios or have one of a handful of Australian producers involved.
The 12.5% offset amount, claimable on qualifying Australian expenditure once a film is finished, is applied to the Australian tax liabilities of the producer.