After more than a decade of lobbying by Ausfilm, crew, studios and other service businesses, the government announced at the Federal Budget it has decided to permanently lift the Location Offset to 30 per cent from July 1 this year.
Alongside the Location Offset change, Ausfilm will also receive an additional $6.9 million over four years to continue to promote Australia as a screen production destination, and $1.8 million per year ongoing.
The Location Offset is the government’s key lever to attract footloose production to Australia under the Australian Screen Production Incentive (which also includes the Producer Offset and PDV Offset). At 16.5 per cent, it has long been regarded as globally uncompetitive. Calls to raise the Location Offset to 30 per cent go back as far as 2013 when the Gillard Government was preparing its Creative Australia policy.
For the last five years, the Location Incentive program – first launched at $140 million in 2018, with a further $400 million added in 2020 – has effectively served to bring the Location Offset to that far more internationally attractive 30 per cent level. Prior to the introduction of the Location Incentive, projects such as Aquaman, Alien: Covenant, Thor: Ragnarok and Pirates of the Caribbean: Dead Men Tell No Tales were all lured to Australia via additional, one-off cash grants.
The Location Incentive program has helped to bring 40 international productions to Australia in the last five years, and generated $3.28 billion for the economy. It particularly served the country well as a production attraction tool during the pandemic, when an influx of foreign shoots hit our shores, including blockbuster Marvel projects such as Thor: Love and Thunder and Shang-Chi: The Legend of the Ten Rings. The upswing has also come with major infrastructure upgrades; AppleTV+ series Metropolis has seen Nantstudios establish the world’s largest virtual production volume in Melbourne.
However, the Location Incentive program was being drawn down on quickly; the $400 million was set to run out this year despite the fact that funding was supposed to last until 2027. That the incentive was finite and merit-assessed has also reportedly caused uncertainty for Hollywood studios considering bringing their projects to Australia. Footloose incentives offered by countries such as the UK and Canada and the US state of Georgia are commonly perceived as more reliable.
A February report from Olsberg SPI, commissioned by the Australia New Zealand Screen Association (ANZSA), also found that the uncertainties around the Location Incentive were seeing investors in studio infrastructure, both domestic and international, hold back plans. The report stated this was an issue given Australia was “considerably underserved” in terms of purpose-built studio capacity when compared to international competitors. While there have been several announcements for new studios in the last few years, including state government-supported stages in Perth and Cairns, development has been slow.
The government projects the lift of the Location Offset as costing $112.2 million over four years from 2024–25. To be eligible for the new Location Offset, the QAPE (Qualifying Australian Production Expenditure) threshold increases to $20 million for feature films and $1.5 million per hour for series – under the 16.5 per cent offset thresholds were $15 million or $1 million per hour for series.
There will also be new requirements introduced that will require productions to meet minimum training obligations or contribute to the broader workforce and infrastructure capacity of the sector, and use one or more Australian providers to deliver post, digital and visual effects.
Productions will also be subject to new reporting requirements to capture data including employment of Australian crew and use of Australian businesses.
Ausfilm CEO Kate Marks said the permanently increased offset would provide certainty for international productions and stable employment for Australian screen businesses.
“This is outstanding news for the industry. A permanent 30 per cent Location Offset will ensure a robust pipeline of both physical production and PDV work into the future and cement Australia’s position as a leader in the global screen industry,” Marks said.
“Increasing the Location Offset will result in meaningful benefits for the entire sector and the economy related to jobs and training opportunities, innovations in technology, infrastructure development, along with direct benefits to businesses not dedicated to the screen industry (e.g., construction, education, hospitality, security, travel, real estate). It will also drive significant benefits to regional locations and businesses.
“International clients have demonstrated their willingness to work with us on skills and training, and this decision provides a big opportunity to build the industry’s capacity across infrastructure and skills into the future.”
ANZSA, whose members include the major US studios, Village Roadshow, the Motion Picture Association (MPA) Asia Pacific and Fetch TV, also congratulated the Federal Government for recognising the screen industry as a key economic driver; its Olsberg report found that the Location Offset/Incentive returned $5.89 to the economy for every $1 spent.
“Increasing the Location Offset will provide certainty and stability, which is needed to develop screen industry capacity that can support a growing sector,” said ANZSA CEO Paul Muller.
The Media, Entertainment and Arts Alliance (MEAA) also welcomed the change, arguing it would make Australia more globally competitive in attracting major offshore productions and create jobs and further investment in the screen industry.
“The new 30 per cent location offset for screen productions will create a more level playing field and greater certainty than the previous fragmented approach of a smaller rebate and a merit-based grants program that has now been exhausted,” said MEAA chief executive Erin Madeley.
“A major outstanding reform for our screen industry is the regulation of SVOD providers, such as Netflix and Amazon Prime, and we welcome the government’s consultation on this critical measure.
“Revenues from this sector are about $3 billion per year. It’s a mature industry that needs regulating to ensure that Australian content and productions can continue to be made.”
Other than the Location Offset change, the Federal Budget had no other major surprises for the screen industry; most of the government’s policies had been announced in January with Revive or on other occasions.
As previously announced, Screen Australia will receive $12 million over four years and $3 million per year ongoing to support interactive games, and the National Film and Sound Archive will receive $34 million over four years (and $9.7 million per year ongoing) to replace building management, security and fire safety systems.
The government has also set aside $.5 million over three years from 2024–25, and $.2 million per year ongoing, for the Australia-India Audio-Visual Co-Production Agreement to enable eligible producers to access the Producer Offset.
AFTRS will also get $.5 million to support course offerings and upgrade facilities, and there is also $8.8 million to go towards the eight national arts training organisations more generally, which includes both AFTRS and NIDA, to secure critical training courses and skills development.
This is the first budget under the new five-year funding terms for the ABC and SBS, with annual funding of $1.1 billion for the ABC and $334.9 million for SBS. New measures include an additional $72 million for the broadcasters over four years to extend and roll three previously terminating programs into ongoing funding. This includes ABC’s Enhanced News Gathering to support regional journalists, as well as funding for SBS Media Sector Support, which focuses on resources for Australians who speak languages other than English, and ABC and SBS audio description for the blind or vision impaired. The ABC will receive $8.5 million over four years to expand transmission infrastructure in the Pacific under the Indo-Pacific Broadcasting Strategy.
ABC managing director David Anderson said welcomed the five-year budget allocation, arguing it reflects the ABC’s important role in Australian life and the value it delivers to the community.
“The funding provides a solid foundation as the ABC continues to evolve its services to meet the needs of Australian audiences. The next five years will be crucial to the ABC as we navigate significant changes in media consumption, industry-wide cost pressures and increasing requirements to modernise and adapt to new technology,” he said.
“The funding certainty provided by the Budget is vital, as it enables the ABC to plan with confidence. Notwithstanding the five-year funding outcome, the ABC will need to meet the challenge of upward cost pressure, and position itself to continue to be trusted, relevant and valued by all Australians into the future.
“I will soon announce a new Five-Year Plan setting out the ABC’s priorities. The plan will ensure that we embrace the opportunities of the future, and that the ABC remains the most important cultural institution for all Australians.”
SBS has also welcomed the five-year funding terms, with a spokesperson stating it would give continuity and stability, and allow it to continue providing services for all Australians, especially multilingual and First Nations communities.
“We also welcome the decision to continue and incorporate existing funding for language services and audio description into our base funding, in recognition of the value these services bring to audiences across Australia,” they said.