Role Of Government Finance

Posted: February 03, 2017

The government of Australia provides financial support for feature films produced in Australia as an incentive for film producers to come and produce their films in Australia. In the past there this funding was channelled through several institutions for instance the film finance corporation funded 25-30% of Australian feature films while film Australia was set up for production of films about Australia. There was also the Australian Film Commission responsible for the creation and distribution of Australian films and also ensuring that the country’s film industry is well preserved. However the three state corporations were merged to form Screen Australia in the year 2008.

Australia government created the Australian screen production incentive as a way of supporting and promoting Australia’s film and television production. The incentive represents various tax incentives for film, screen and other screen production which exists in three forms: the producer offset, the location offset and the post, digital and visual effects production in Australia (PDV) (Clarkin 98). The produce offset is administered through screen Australia while the location offset and PDV offset are administered through the Ministry for the Arts.

The producer offset provides a 40% rebate on Qualifying Australian Production Expenditure (QAPE) for theatrically released feature films productions. This include documentary, IMAX and animations and a 20% rebate for single episode documentary and dramas and is eligible for films with substantial Australian content and meets the threshold of minimum expenditure. The PDV offset involves a 30% rebate on post-production and visual effects qualifying Australian production expenditure and is eligible for at least AUD$500,000 total PDV expenditure. The location offset is 16.5% Qualifying Australian Production Expenditure rebate and is eligible for at films of at least AUD$15 million QAPE or television series with an average of AUD$1 million per hour QAPE of finished production (Clarkin 100).

The main purpose of government financing in screen production is to increase film production and promote growth of the Australian screen industry by ensuring development of sustainable businesses (Goldsmith 12). This is achieved through the requirements for eligibility for the various incentives for example the producer offset requires that the films must have a significant amount of Australian content so as to help in the development of local content (Goldsmith 13). The producer offset is also meant to facilitate the retention of substantial equity by the producers of the films and enable them to build more stable and sustainable production companies. This will aid in ensuring that the sustained growth and development of the Australian film industry.

By ensuring growth of the film industries they will be providing employment to their citizens. The film industry is a lucrative business which if well exploited can provide the Australian citizens with employment and skills development opportunities (Clarkin 99). The location offset is meant to attract film productions that involve large budgets to Australia especially offshore productions as they would provide not only employment but also allow for technology and skills transfer to domestic independent firms (Clarkin 100).

Government financing in screen production is also aimed at attracting film producers to Australia as a films production destination through the PDV offset (Cameron 99). The PDV offset also helps in attracting large budget post-production, digital and visual effects to Australia for films that were shot in other elsewhere. It also allows for technology transfer for Australian technicians and improves the country’s screen industry skills base. This will help raise Australia’s profile in the film industry business and thus encourage the production of more films in the country and also help market Australian films to the international markets (O’Regan and Anna 5). It also promotes the country’s tourism sector both directly through the foreign cast and crew that will be required in the production of films and indirectly through the exposure created by these movies of the tourist features that are available in Australia as the movies reach an international audience.

The government also aims to ensure that there is increased uptake and acceptance of the local content within Australia (Goldsmith 14). This is accomplished through screen Australia’s objectives which is mandated with ensuring not only the production and development of Australian programs but is also charged with the responsibility of promotion, distribution and providing access to them. This coupled with the incentives that help in attracting foreign productions that in turn facilitate technology and skills transfer help in the realisation of these objective as the calibre of the local productions increases to international standards enabling them gain acceptance both locally and internationally.

While there has been considerable effectiveness of government financing in the screen industry as it has registered production of more films in Australia both local and foreign, questions have emerged over whether, considering the amounts involved in supporting the screen industry, it is necessary for continued government funding to ensure growth and development of the screen industry (Pusey and Marion 22).

The 2010 Review of the Australian Independent Screen Production Sector by the federal Arts Department revealed that since the introduction of the incentive the government as provided more than twice the money it provided in the same duration before (Pusey and Marion 28). This certainly shows the amounts involved and therefore creating the need for cost-benefit analysis that is whether the additional funds have really had the desired impact of increasing domestic production. While this report showed increased activity especially in the production of large budget Australian films most of the money was for funding foreign movies through international production subsidies as opposed to domestic production. Furthermore, it showed that there has been a decrease in the foreign production levels due strengthening of the Aussie dollar coupled with increased competition from other countries that have reduced the attractiveness of these incentives (Pusey and Marion 30).The number of hours of Australian produced drama aired on television also remained steady despite increase in drama budgets. Thus this has really raised concerns on the viability of government support in the screen industry.

However there has been increased production and more private investments attracted to the Australian feature films and therefore it represents a step in the right direction for the Australian film industry (Cameron 98). The incentive has also been operational for a few years now and therefore it would be imprudent to write off its effectiveness on the first few years as also the film industry is also getting to terms with it and also during this period foreign production companies have been discouraged by the strengthening of the Aussie dollar and therefore its impact cannot be properly gauged. The government financing and support is necessary for the Australian film industry as it not only helps in increasing production and uptake of domestic production but also helps in raising the calibre of the Australian films through improvement of skills and technology of the domestic film production companies hence can enable them produce films for the international market too.

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