SPAA wraps on upbeat note

Producer offset and its effectiveness a main topic of forum

SYDNEY -- Concerns about the mechanics of producer offset tax incentive system  were tempered by inspirational insights from Mad Men creator Matt Weiner and some solid results from local films this year, expressed at the annual Screen Producers Association of Australia confab which closed here Friday. 

While most delegates and speakers argued that the offset system, which gives producers back 40% of  the production budget -- producers said it's more like 34% -- for qualifying films and 20% for TV projects, was on the whole working well and contributing to a robust slate of production. A near-record 44 features were released this year, much discussion centered on difficulties of its operation. 

Those include the timing of payments by the Australian Tax office to producers, with producers having to wait until the end of the financial year to claim the offset, making it necessary to find additional cashflow finance. In addition, transaction costs for documentaries accessing the offset are extremely high. 

Shadow Arts minister Steven Ciobo said Wednesday he would introduce legislation to help the industry and the government derives greater benefit from the producer offset.

“Under the current lodgment arrangements, neither producers nor the government are getting the full benefit which was anticipated from the offset,” Ciobo said. “I am moving a private members bill in parliament on Monday night, that will ask the Australian Tax Office to acquit early any lodgment by those companies that are seeking to use the producers offset." 

Those issues have been raised ahead of a statutory review of the system next year. 
 Screen Australia CEO Ruth Harley further warned added that the agency’s  direct funding of features will contract, making it difficult for films in the AUS$5 - $15 million ($4.5-$13.5 million) range to raise budgets on the basis of the offset alone. 

Several speakers noted that the real problems for the industry are not with the offset, but the financing drought created by the global financial crisis. 

“You can't pre-sell any films, you can’t even sell finished films, and sales agents are going under. Then there’s the Australian dollar at 90 cents. With no presale there is  no gap financing and no lenders,” said Bryce Menzies, a partner at entertainment law firm Marshalls and Dent.

“It's extremely difficult to finance films at the moment with the exception of India,” he added.

Indeed Screen Australia’s Harley contends that if the offset had not been in place, the Australian sector would not have fared as well as it has.

SA estimates that 90 projects have received the offset in the last two years, with $123 million provided to producers through the tax break.

Harley also released figures that showed a total of 44 locally produced features will be released this year with a projected boxoffice of $48 million or over 5%, well above the five year average. The bulk of those are limited and specialty releases.

To get close to the record of 18%, last achieved in 1998, SPAA president Anthony Ginnane said “We need to resolve once and for all the 40-year push/pull between art and commerce. Industry and government need to accept this is a business, not a culture fest." 

“In the film industry government intervention has been consistently used to assist in the creation of product the market does not want, and the market tells us that, year in, year out, by rejecting it en masse.

"Perhaps collectively our ability to read the marketplace and audience appetite has been so dulled by the subsidy drug that we've completely forgotten what audiences want," he said.

As the conference wrapped Emile Sherman was named SPAA’s independent producer of the year. Sherman has produced films like “Rabbit Proof Fence” and "Candy" and is now principal of See Saw Films with U.K.-based partner Ian Canning, and its finance arm Fulcrum Media, as well as director and shareholder of distributor, Transmission. 

Melanie Coombs, won the feature film producer of the year award for “Mary and Max," Suzanne Ryan of SLR Productions won the children’s TV award for “Dex Hamilton: Alien Entomologist," Screentime won TV drama for “Underbelly Series 2” and FremantleMedia Australia won the Television Light entertainment category for the record-breaking “Masterchef Australia." Best documentary producer was Cathy Henkel for “The Burning Season."