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PRODUCER OFFSET SCHEME 2007 - THE GOOD, THE BAD AND THE UGLY

The good news is that the Government has passed legislation (slightly improved after industry lobbying) to enshrine its May budget proposals for rebates to film and tv producers which amounts to a new world order of funding production. The bad news is that it’s a lot trickier than it looked at first glance and the touted 40% (for features) will only apply to eligible expenditure – which excludes lots of things, including marketing. The ugly bits are to be found in the inequities unearthed while poring through the small print. Andrew L. Urban reports.

The devil’s always in the detail … read the small print …. red tape will choke enterprise … you can’t trust politicians … But let’s look on the bright side, as the Film Finance Corporation takes a deep collective breath (having been given the task of administering the scheme) as it travels the country talking to film and tv executives about the workings of the scheme. This week, the whole industry gathers on the Gold Coast for the annual screen production conference. It’s only in the past couple of weeks that the details of guidelines and application forms have been finalised. And it is only now that Antonia Barnard, Manager of the Offset scheme at the FFC, is able to outline in some detail what the process is and what expectations producers should have.

The bright side begins with the rebate belonging exclusively to the producer. He or she may well negotiate some of it in return for finance, but it provides a solid stake in the project. The rebate (now referred to as the Producer Offset, don’t ask why) is intended to help film and television producers build sustainable businesses that can survive between projects.

The other major good news is that there is no upper limit to the size of the production budget, nor a cap on annual offset payments in total.

There are a couple of safety rules to prevent foreign productions accessing this rebate. The first hurdle is that the applicant must be a registered Australian resident/company. The second, even more rigorous, is the test of Significant Australian Content in the project, and that will be assessed case by case, with an eye on the content of the project, the people behind it and the ultimate beneficiaries.

(Offshore productions already have access to a 15% ‘location offset’ for shooting in Australia.)

But there are downsides. For instance, producers will not know exactly what they will receive by way of a rebate of the total production budget until well after the money has been spent and all expenses scrutinised. Some expenses are excluded, some are partially eligible and some are fully rebateable. The maximum rebate a producer of a feature length film will receive is 40% of the allowable expenses. That may end up about 35% of the actual budget.

Costs incurred before production begins, and after principal photography has ceased, are generally ineligible. Legals and financing costs are subject to exclusion. Marketing costs are definitely excluded. Many costs incurred overseas are subject to exclusion.

In TV, which many regard as the cradle of the screen production industry, producers are only eligible for a maximum of 20% of eligible expenses. So far, there seems to be no rationale articulated for this level of rebate. Likewise, documentary producers are only eligible for 20%, and there are budget minimums. Again, no policy rationale is issued with this policy.

Low budget filmmakers have been totally excluded from the new production funding initiative: feature films with budgets under $1 million are ineligible, and since there is no longer a tax write off available under 10BA (ditched with the introduction of the new offset scheme), they can’t even offer their potential investors a tax deduction. This is one of the ugliest holes in this new policy and one that should be revisited – urgently.

The first step in the process (any production) is a self-assessment made by applying producers, using information on the FFC website.

Published November 15, 2007
 

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ANTONIA BARNARD INTERVIEW
Producer Offset Manager at the Film Finance Corporation, Antonia Barnard, explains the workings of the scheme to Andrew L. Urban

THE KNOWLEDGE
dozens of in-depth interviews with industry practitioners, whose experiences provide invaluable information about the business of film and tv. Among the interviews:

Veteran producer Matt Carroll says Government money is spread too thinly and often badly – and says producers need at least $500 - $600 K working capital/development funds;

Screen composer Guy Gross warns against sending out demo tapes to filmmakers;

Director Bruce Beresford warns against being soft hearted towards shonky producers;

Producer Rosemary Blight on how Clubland got her IN – and nearly OUT – of the Hollywood power mix;

Posie Graeme-Evans reveals the inside story of how she first pitched McLeod’s Daughters

Hal McElroy on why and how he split from his twin brother Jim and from Southern Star – and how he and his wife now run their $10 million production company on their own







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