Outback comeback for Aussie film industry

With a number of new high-profile projects and a revamped incentive scheme, Australia could reclaim its status as a premier shooting destination.

SYDNEY -- Given the Aussie film industry's struggles of late, director Baz Luhrmann's decision to title his latest outing "Australia" couldn't have come at a better time for a film sector desperately in need of a fresh start.

Indeed, the industry Down Under has been hit hard by a significant downturn in offshore production shooting in Australia the past two years. Hopes are high that Luhrmann's announcement about his fourth feature -- its naming and all the marketing opportunities that it presents -- will coincide with an uptick in production across several key states.

Luhrmann admits that the combination of Nicole Kidman and Hugh Jackman in the leads, combined with the wide-screen vistas of the Australian outback, provide some tourism-related benefits, though his reasons for giving the film the title of his home country are slightly less prosaic.


"I couldn't take the title away if I tried because it named itself," Luhrmann told national daily newspaper the Australian in an interview recently. "The film is not didactically about this country -- the title represents the main character's journey, her state of mind. While she is there, the landscape, people and experiences of this faraway exotic country bring renewal to her life."

That said, several heads of the various state-based agencies see the film as a "great branding exercise" for the locations business, particularly if it's a major success.

Luhrmann will spend several months shooting on location in Queensland and the northwest of the country after receiving AUS$1 million ($778,201) in incentives from Screen West and the Pacific Film and Television Commission. The production is part of an increasing trend here for big-budget studio pictures and TV series to choose locations over studio-based shoots.

After a dire period where offshore production spending in Australia slumped to only AUS$23 million ($17.9 million) in fiscal 2005-06 -- down from AUS$243 million ($189 million) in 2004-05 -- Australia's locations businesses are experiencing a solid upturn.

Part of the trend is the growing recognition by producers that Australian locations "double up" as other locales. To that end, Australia's locations marketing agency, Ausfilm, has recently changed its marketing focus with the tagline "Australia -- Anywhere You Want to Be." Happily, Australia has secured Warner Bros. Pictures' upcoming Kate Hudson/Matthew McConaughey starrer "Fool's Gold," where Queensland is doubling as the Caribbean, while rural Victoria recently stood in for Maine in Paramount's current hit "Charlotte's Web."

Ausfilm CEO Mark Woods says the marketing shift means "we're being pragmatic."

"Movies come here to be somewhere else -- we're not Middle Earth'" he says, referring to the moniker New Zealand adopted after the success of New Line's "The Lord of the Rings" (2001-03) trilogy.

In addition to "Web," at press time, at least five big-budget features and TV productions shot in Australia were in various stages of release, including TNT's Stephen King miniseries "Nightmares and Dreamscapes," Sony's upcoming Nicolas Cage starrer "Ghost Rider," Fox 2000's teen feature "Aquamarine" and Warner Bros.' locally produced "Happy Feet."

The slate for 2007 also is filling up.

While Luhrmann's "Australia" is in preproduction, Victoria is currently hosting Warners' "Where the Wild Things Are" and is hoping to announce several more projects in the new year. As well as "Fool's Gold," Queensland is home to the TV miniseries "Monarchs Cove" and "Starter Wife," as well as the U.K. reality hit "I'm a Celebrity, Get Me Out of Here." Additionally, New South Wales' Fox Studios is looking to announce two major new projects for 2007; it also has space on hold for a "Star Wars" spinoff TV series.

"Charlotte's Web" producer Jordan Kerner cites locations and rebates as the two key reasons for producers to shoot in this country, but he warns that "the tax incentives for the U.S. studios will remain critical, and they need to remain competitive."

Says Kerner: "Canada, for one, has seen Australia as a great threat, so they're raising their incentives. Australia is going to have to look at it and figure out how it's going to remain competitive.

"Location includes studio facilities, a crew base and a great actor base, so you don't have to bring everybody here -- for those, Australia is a phenomenal environment," he adds.

PFTC CEO Robin James notes that the issue of incentives and rebates currently has the industry's attention more than ever before. "Most major studios now have distinct divisions looking purely at the incentives business globally," he says.

In fact, the industry spent the latter half of 2006 lobbying the federal government for changes to the tax-incentive scheme for medium- to big-budget productions. The effort marks the first time the industry has formed a united front against the government.

Lawmakers are, in turn, undertaking three different reviews to support measures for the Australian film industry, the outcomes of which are expected to be outlined in May's federal budget.

Australia's current tax-offset scheme, instituted in 2001, offers a 12.5% cash rebate based on 70% of budget expenditure within the country to projects between AUS$15 million ($11.6 million) and AUS$50 million ($38.9 million). The scheme was extended in 2003 to include big-budget TV series and miniseries.

Since then, a number of key territories, including Canada and the U.K., as well as several U.S. states, have upped the ante on rebates to as much as 20% of production expenditure, while the Australian dollar has strengthened against the U.S. dollar by around 20%.

Therefore, the industry here has proposed a revised package that includes: raising the percentage rebate of the offset to 15%, relaxing the 70% local spend threshold, providing a separate rebate of AUS$5 million ($3.9 million) for post, digital and video effects work and providing a supplementary production scheme, which would effectively be an Australian "frequent filmers" bonus to reward clients who have spent more then AUS$50 million ($38.9 million) here.

The possibility for changes to the scheme were bolstered recently when Arts minister Rod Kemp commented that any changes to government assistance to the film industry will be made "to ensure our film-support measures remain effective and internationally competitive."

The general consensus is that at the very least, the government will raise the offset rebate to 15% and introduce a lower threshold for the postproduction sector.

But while an increase in incentives is broadly welcomed, some are asking whether the changes to the scheme will be enough to match global competitors.

"We have to be pragmatic as it doesn't seem there's the openness of mind to understand what it would take to raise the bar further," says Zareh Nalbandian, executive producer of "Happy Feet" and the head of Australia's largest post digital video company Animal Logic, who believes that the increases being talked about are only "incremental." "When 12.5% goes to 15%, everyone will be happy, but we couldn't even get to 16%? What sort of statement is that?"

For the time being, the debate will continue. But Fox Studios Australia chief executive Nancy Romano, for one, expects a flood of new productions to head Down Under. "We have the cast, the crew, the facilities," she says. "Ultimately, for the studios, it's all about the dollar, and it will flood back into the country."