NSW Government confirms $60 million cut to screen funding, producers signal projects and businesses to move interstate

Disney+'s 'The Artful Dodger' shot in NSW with support from the Made in NSW fund.

Producers have labelled the NSW Government’s decision to proceed with $60 million of cuts to the state’s screen funding programs, impacting the Made In NSW fund and the Post, Digital and Visual Effects Rebate, as “reckless” and “nothing short of a disaster”.

The Minns government, which handed down its first budget yesterday, first flagged the cuts last week, though did not put a dollar figure on what they would be until now. It argues it has inherited these cuts as part of a broader $188 million cut to the Department of Enterprise, Investment and Trade by the former Coalition government, made on March 8 as part of the Pre-election Budget Update. 

Last week both Screen Producers Australia (SPA) and the Media, Entertainment and Arts Alliance met with Arts Minister John Graham in order to discuss the cuts and the potential of their reversal, though that was not fruitful.

Since the initial announcement that the programs would be cut, SPA surveyed 319 NSW-based production companies on the implications. When asked if they would cause them to move their productions or their businesses interstate, 92.3 per cent answered yes. Every business surveyed had used the funds affected in the past or intended to use them in the next financial year.

The majority of production and post-production companies in Australia are based in NSW. According to the most recent Australian Bureau of Statistics (ABS) Film, Television and Digital Games survey, the NSW screen industry generated more than $3 billion in total income in 2021-22Of the 4,575 film and video production businesses in Australia, 3,051 are based in NSW. Of the 604 post-production businesses, 308 are located in NSW.

It is understood there are a significant number of projects in the pipeline across both the Made in NSW fund and the PDV rebate, which the state government is now working through on a case by case basis. It has committed $5 million to assure projects currently in production can proceed, so far securing five projects and 1,372 jobs.

The Made in NSW fund is the state’s major production attraction program, and has supported international and local projects such as George Miller’s Furiosa, Disney+’s The Artful Dodger and Amazon’s The Lost Flowers of Alice Hart. According to the government’s own figures, for every dollar spent on the Made in NSW program there is an economic benefit of $20-$21.

The 10 per cent PDV rebate, first introduced in 2019, was a key driver for major VFX business such as ILM and DNEG to establish studios in NSW. Since it was established, data from Screen Australia suggests PDV expenditure in NSW has increased from $148 million in 2018/19 to $313 million in 2021/22. The program was widened to cover games, via the Digital Games Development Rebate Program, in 2021. Victoria, Queensland, South Australia and Western Australia all offer similar PDV and games rebates, with the government’s decision to slash the program effectively rendering NSW financially uncompetitive.

In a statement provided to IF, Minister Graham acknowledged the situation was serious, while again arguing the government was in this position due to the “secret cuts” of the former.

The minister said he would meet with other representatives from the screen sector this week, including post-production and visual effects companies, while also hosting an industry roundtable on September 26 to consider a revised approach to domestic and international screen support in film, television, and digital games.

“I am working with the sector to find a way to support and protect the screen and production sector as best we can,” he said.

“We have not been able to fix all this damage in the first budget, it’s going to take time.

“The forthcoming Arts, Culture and Creative Industries policy, as well as Screen NSW’s Three-Year Strategy, presents a timely opportunity to submit a business case that aligns with and supports the objectives of the new policy and provide long term support to the sector.”

SPA CEO Matthew Deaner said he had been “inundated” with calls and emails from members affected by the government’s decision to proceed with the cuts.

The organisation has calculated that 85 upcoming projects are impacted, jeopardising $1.4 billion in economic activity and 29,800 jobs.

“However, there are likely to be many, many more jobs and investments lost to the state that will only become apparent over time if the state is slow to act,” Deaner said.

“Film and television production businesses work hard to bring a range of financing partners together to fund a production. They rely on the reputation of the NSW Government to secure funding from a range of sources, both public and private. These are complex commercial arrangements that rely strongly on the goodwill and good faith of each partner to conclude. 

“The lack of notice about the end to these programs is a significant departure from normal administrative practice as planning and financing for the screen sector is done years in advance of production. That is why it is a deep shock to the state’s screen producers and screen businesses that the NSW Government has now apparently withdrawn as a source of funding and with no warning. This decision appears reckless to the fate of these businesses and the people they employ.”

Deaner added that the $5 million pledge for the most critical projects, still leaves a significant immediate funding gap and “is not enough to ensure that a collapse of projects in the state is averted”, instead suggesting another $20 million is required between now and the end of the year in order to “avert the crash that is looming”.

“SPA is today calling on the Premier, the Treasurer and Minister for the Arts to address this funding gap urgently. The future of the state’s screen industry is at stake,” Deaner said.

In a statement released this morning, the Interactive Games and Entertainment Association (IGEA) said it was “incredibly disappointed” to see the hit to the games rebate after NSW had steadily built its presence in the games sector for the last few years.

“The landscape in Australia for the sector to surge in employment, skills, business attraction and exports is ripe. The Commonwealth Government fully supports the game development industry, demonstrated by introducing the Digital Games Tax Offset in conjunction with direct games funding through Screen Australia.  These Federal incentives support smaller and larger game projects created locally and encourage investment in Australia.

“To capitalise on this and attract studios, other states across Australia are increasing and improving their game development funding to reap the benefits that a thriving, supported and recognised game development sector can tribute to a creative and technically skilled local economy. Sadly, NSW is now headed in the opposite direction. Not only is NSW the only state in Australia that does not have direct video game development funding options, a reduced rebate program leaves NSW with virtually no competitive edge and no incentives for up and coming video game creators to stay local.”

Screen NSW has statements on its websites for all three funding programs stating they have been paused as it assesses the impacts of the cuts, and no new applications will be processed.