Producer Offset to remain at 40 per cent for theatrical features, TIF extended

Minister for Communications, Urban Infrastructure, Cities and the Arts Paul Fletcher.

In a welcome move for industry, the Federal Government has backtracked on its decision to harmonise the Producer Offset for film and television, announcing on Sunday that the offset will remain at 40 per cent for theatrical features.

However, a spokesperson for the Minister for Communications, Urban Infrastructure, Cities and the Arts Paul Fletcher confirmed to IF that the government still intends to proceed with other controversial aspects of offset reform, including raising the QAPE threshold from $500,000 to $1 million, and removing the Gallipoli Clause.

Ahead of last year’s budget, the government announced its intention to level the Producer Offset for both film and television at 30 per cent. Previously, the TV offset had been 20 per cent, and the film offset 40 per cent.

While the move to lift the TV offset was seen as welcome and long-overdue, the decision to reduce the film offset was immediately met with consternation. Many producers argued it would be the “death knell” of Australian films in the cinema, with Screen Producers Australia (SPA) arguing the cut could “mean the end of the line for so many great Australian feature films.”

It was also variously pointed out that if the Producer Offset was set at 30 per cent, local producers would effectively only receive the same level of support from the government as foreign production under the combination of the Location Incentive Program and the Location Offset.

Last month, a delegation from the Make It Australian campaign – spearheaded by the Australian Directors’ Guild (ADG), Australian Writers’ Guild (AWG), the Media Entertainment and Arts Alliance (MEAA) and SPA – visited Canberra to lobby on various issues, including keeping the film Producer Offset at 40 per cent.

Announcing the government’s decision to walk back on the reform, Minister Fletcher said: “Australian feature films play an important role in our cultural identity and resonate strongly with audiences at home and abroad. 

“After consulting with Australian feature film producers and considering the feature film environment abroad, we have determined that retaining the offset at 40 per cent is appropriate to ensure the ongoing vitality of the sector.”

The government will still proceed with raising the Producer Offset rate from 20 to 30 per cent for eligible projects made for TV and streaming services.

On Sunday the government also announced it would extend the $50 million Temporary Interruption Fund (TIF), which covers productions against COVID-19, until December.

“Despite our successes in managing COVID-19 in Australia, the continuing severity of the pandemic internationally is a problem for screen production, with insurers still not providing coverage for COVID-19 related events,” Minister Fletcher said.

“TIF has been vital in providing the certainty that productions need to secure financing, and it will have assisted with more than 12,000 production roles and 5000 business contracts in its first year of operation.”

SPA heralded the offset decision, with CEO Matthew Deaner stating it would not only safeguard Australia stories on the big screen, but local jobs and businesses.

“Australia has proven an attractive destination for international production, but today’s announcement ensures an appropriate balancing of Government support between inbound and local film making.

“We thank Minister Fletcher, Treasurer Frydenberg, Prime Minister Morrison and their colleagues across the back benches for listening and engaging actively with our sector over recent months. The voice from the sector has been a strong and passionate one to these leaders and their Federal Government colleagues and we are both extremely pleased and grateful for the result.”

ADG executive director Alaric McAusland similarly commended the move, telling IF: “The recent box office success of Australian movies shows how much we all want Australian stories on Australian screens told by us, to us, about us. But Australian stories need strong rules and support to reach audiences. So the ADG commends Minister Paul Fletcher and the Morrison Government on listening to industry and reinstating the Producer Offset for Australian feature film and extending the Temporary Interruption Fund by a further 6 months.

“Both measures are great news for Australian storytellers, Australian cinemas and Australian audiences. Critically, a 40 per cent feature offset ensures that movies like The Dry and The Drover’s Wife continue to get made and that as a result our culture continues to be reflected back at us from the big screen.”

However, McAusland said he hoped the government would continue to listen the industry and walk back changes to the offset threshold and the Gallpoli clause.

“There remains widely held concern that they will have a decimating impact to the documentary sector and to low budget movies, the traditional breeding ground for emerging Australian talent and innovative filmmaking.”

The AWG commended the government for listening to industry, and is hopeful this augurs well for the upcoming green paper review and its consideration of streaming service regulation.

President Shane Brennan said: “This is the first concrete sign from the Morrison Government that it’s ready to back Australian storytellers. At last, we have confirmation from Minister Fletcher that he’s serious about offering incentives for investment in Australian-originated stories, rather than just offshore productions. We extend our gratitude.”

In February, Roadshow Films CEO Joel Pearlman said The Dry – which has made more than $20 million at the box office – would not have been financed if the offset was at 30 per cent.

He too welcomed the news, stating: “The recent success of The Dry, Penguin Bloom and High Ground shows how much Australians love going to the cinema to see their own lives and culture on the big screen. The Producer Offset for feature film is a critical part of supporting Australian stories on screen and since its introduction in 2007 by the Howard Government it has been the difference for dozens of Australian films, including these three most recent hits.”

Madman Entertainment co-founder and CEO Paul Wiegard agreed, pointing out the news would also be welcome for exhibitors, badly affected by closures over the last year.

“This is wonderful news not just for Australian audiences and the filmmakers who seek to reach them with Australia stories, but also for the entire screen ecosystem, such as our network of independent and regional cinemas, who have been hit hard by the pandemic in the last 12 months and who rely on a steady supply of local films to service cinema goers’ appetites.”