Offset reform passes, QAPE threshold to remain at $500k, Gallipoli Clause remains

The legislative changes to the federal tax incentives have passed through both houses of Parliament, with amendments that keep the minimum qualifying Australian expenditure (QAPE) threshold at $500,000 for both the Producer and PDV offsets.

The Gallipoli Clause, which allows production costs incurred in other countries to be claimed under the Producer Offset, has also been retained.

The news has already been welcomed by Screen Producers Australia, with CEO Matthew Deaner describing it as a “landmark day for the production sector”.

“The passing of the laws will unlock rich new streams of financial support into the sector, and is the culmination of years of effort.

“It’s also an important day for Australian audiences, with the boost in the Offset an important part of securing the future of Australian stories on the small screen.”

Treasury Laws Amendment (2021 Measures No. 5) Bill 2021 was debated in the Senate this morning, before being referred back to the House of Representatives with amendments from both parties, which were then passed.

A key element of the legislation was lifting the Producer Offset for non-feature length content from 20 to 30 per cent, and the passage of the Bill before the end of the sitting year had become a pressing priority for the industry.

Given the legislation is supposed to apply retroactively to July 1, many TV projects had already gone into production on the assumption of a 30 per cent offset.

While the government originally proposed to lift the QAPE threshold for the Producer and PDV Offsets from $500,000 to $1 million, Labor Senator Jenny McAllister moved an amendment this morning to remove such “damaging parts” of the legislation.

Senator Jenny McAllister.

“We recognise the urgency and importance of the Bill’s passage; we won’t stand in the way,” she told the Senate.

“But we utterly reject the government’s attempt to bundle measures that are unambiguously good for the industry in with measures that are damaging to other parts of the industry.”

Labor’s stance drew a sharp response from Minister for Communications, Urban Infrastructure, Cities and the Arts Paul Fletcher, who said the Bill would “pass as a whole, or not at all”.

“Labor’s brazen piece of political point-scoring puts a number of screen companies in immediate danger,” he said.

“Production companies have already taken loans on the basis of the increase in the offset from 20 to 30 per cent.

“If the additional funding through the Producer Offset is unavailable or delayed it will threaten the continued production of projects in Australia.”

However, the amended Bill was passed by the House of Representatives just hours later.

SPA has welcomed the amendments, noting if passed, those reforms would have made accessing financing support harder for a range of producers.

A spokesman for Minister Fletcher’s office described the passage of the Bill as “great news for Australia’s production sector”.

“For some 18 months the Morrison Government has worked through a careful public policy process to increase the television production offset from 20 to 30 per cent,” they said.

Shadow Minister for the Arts Tony Burke said Labor “has always supported an increase to the Producer Offset to support the creation of more Australian TV content”.

“Jobs have been saved and small businesses have been spared from a tax increase because of a successful Labor amendment supported by the crossbench,” he said.

‘Exciting new chapter’

The passing of the Bill comes more than eight months after a delegation of actors, crew, writers, and producers visited Canberra to lobby the government on changes to the offset reforms as part of the Make it Australian campaign.

Spearhearded by the Australian Directors’ Guild (ADG), Australian Writers’ Guild (AWG), Media, Entertainment & Arts Alliance (MEAA), and Screen Producers Australia (SPA), the campaign already had a victory earlier this year when Minister Fletcher announced the Producer Offset would remain at 40 per cent, rather than being harmonised with non-feature length content at 30 per cent.

ADG executive director Alaric McAusland expected the latest development to usher in a new era for the parts of the screen sector.

“The Parliament’s actions today mark the beginning of an exciting new chapter for small screen production and will boost the amount and quality of Australian content reaching Australian audiences on the small screen,” he said.

MEAA chief executive Paul Murphy said the “crucial” lifting of the offset for non-feature length content from 20 to 30 per cent would provide an incentive for more screen production and more job opportunities for performers and crew.

“Members of Parliament from across the spectrum have worked hard to make these
changes a reality and the final support of the Morrison Government was critical to getting them over the line,” he said.

AWG executive director Claire Pullen said the legislation was timely for the industry.

“This welcome increase in support is the culmination of years of work and campaigning across the sector and will boost investment and jobs at a critical time in the industry’s recovery from COVID19 interruptions,” she said.

Other sections of the industry have also expressed their relief, with Australian Post and VFX Alliance chair Marcus Bolton saying the post-production and VFX sector could now move forward with confidence.

“This decision is a great one for Australian production, post-production, and visual effects,” he said.

“This outcome follows months of sector-wide campaigning led by the Australian Post and VFX Alliance, alongside affected Australian SMEs, state governments and their agencies, and international partners.”

APRA AMCOS), together with the Australian Guild of Screen Composers (AGSC) have been among those to join the effort.

AGSC president Antony Partos said the bill was a “big win” for screen composers.

“This bill will now support the local screen industry with incentives that will promote, encourage and foster not just more local television productions but also documentaries and low budget screen content,” he said.

Retaining the status quo was vital’

Earlier this year, the Documentary Australia Foundation (DAF) penned an open letter to Minister Fletcher calling for the calling for the ‘status quo’ to be maintained on a number of measures for feature documentary, specifically the QAPE threshold and the Gallipoli Clause.

Mitzi Goldman said it had been “enormously reassuring” to hear and sentiments of support and value for the sector as the Bill was passed.

“The articulation from our Parliamentarians that the documentary sector matters is deeply meaningful,” she said.

“And the consequences of this win is that within our stories, marginalised voices are being heard, lived experiences recognised and our culture preserved.”

Documentary Australia impact and education director Clara Williams Roldan agreed, saying the campaign has always been about protecting Australian storytelling.

“After nearly a year of lobbying, it is incredible to see our voice heard in Canberra,” she said.

“Thank you to all the filmmakers and storytellers who signed our letter, made submissions, and got in touch with their MPs. This is a vital, vibrant part of our culture – and it is wonderful to see it protected and recognised by the Federal Government.”

For founder and CEO of Melbourne-based Madman Entertainment Paul Wiegard the Bill “energises all parts of the screen media ecosystem”.

“For the feature documentary filmmakers, retaining the status quo was vital,” he told IF.

“This is an outstanding outcome for the Australian filmmaking community to tell Australian stories.”