Hollywood blockbusters Fall Guy and Planet of the Apes are filming in Sydney, and sci-fi remake Metropolis in Melbourne – all at high public expense, subsidised by state and federal governments. Is it worth paying for Americans telling American stories? Or would the money be better spent on Australians telling Australian stories? Michael West follows the money.

Scenes of Hollywood star Ryan Gosling on the Sydney Harbour Bridge over the weekend were met with fawning adulation in the mainstream media, yet with some consternation on social media. After all, they shut down traffic on the Bridge down for hours; yet climate protestor Violet Coco is facing a 15-month prison sentence for blocking one lane.

And we’re paying for it. The NBC Universal production The Fall Guy – a show about an American stunt-man shot for American markets – has picked up $15m in funding from NSW and $30m from the Federal government. The hand-outs for another Hollywood epic, Metropolis which is to be shot in Melbourne are much higher.

The question is, would the $45m in public subsidies be better spent on Australian productions telling Australian stories, thereby stimulating the film industry in this country rather than subsidising Americans telling American stories? Former chief executive of Film Australia Sharon Connolly says there has been a profound failure of government policy which has gutted a generation of Australian film-makers, condemning them to toil on TV commercials as we have subsidised foreign corporate interests.

“The $2 billion earmarked for offsets and incentives over the next four years will largely go to overseas companies,” says Connolly.

Suspending disbelief

“Leadership of the film industry in Australia does not believe in Australians telling Australian stories,” said another leading industry figure contacted for this story. “There is no belief. They would rather just hand buckets of money to Americans.”

There is no doubt that Hollywood action heroes and stunning images of the Bridge and other Australian scenery does drive tourism revenue, but do claims that Fall Guy will deliver $244m in economic benefits stack up? The numbers are rubbery, fanciful. An investigation by Michael West Media has found the location subsidies are just the tip of the corporate welfare iceberg.

Financial disclosures are opaque, difficult to evaluate; but generous tax breaks, and invoicing to offshore Hollywood entities, would suggest a good deal of the money being forked out by the Australian public flows offshore.

As the Labor government’s new content policy announcement looms care of Arts Minister Tony Burke, film people say a radical overhaul is required to revive the local industry.

“Cultural policy is being used to deliver industrial outcomes (and political ones),” says Sharon Connolly. “No one produces much by way of evidence to support vague figures about the economic benefits of overseas production. Meanwhile, as those few still making content of particular relevance to this country struggle – especially to get adequate distribution and adequate budgets – our collective institutions aren’t funded well enough to ensure Australian stories are preserved and accessible – and our output is increasingly generic”.

“This has all happened before. In the 1920s we lost our pioneering film industry when Hollywood studios took control of cinemas in Australia and all around the world.

“Things haven’t improved. Subsidy delivered by Screen Australia is geared toward building “sustainable businesses” which effectively means those producing for an international market. Streaming quotas are a good idea, but unless we grapple with what is considered an eligible Australian production, our money will continue to serve Californian interests rather than our own. IP will still leave the country.”

Said another industry figure: “Australia is Hollywood’s backlot”. While there are jobs for tradies, and money spent on local restaurants and hotels, the senior creative team on Fall Guy are all Americans.

 

Hollywood accounting

Then there’s QAPE. The Qualifying Australian Production Expenditure incentives designed for producers to get tax breaks are generous. Are they too generous? Hollywood studios don’t send teams of people Downunder because they like a foreign jaunt. It has to stack up financially.

And in order to make that happen, the studios set up Special Purpose Vehicles (SPVs) which appear to result in large amounts of spending being siphoned overseas. An investigation into these SPVs, and one by no means exhaustive, discovered some $369m in Location Incentives.

It is fair to say the tax incentives do benefit local producers too, that government support has spawned success for Australia’s emerging visual effects (Vfx) sector, also that the local content streaming provisions proposed by the federal government, although maybe a decade late, ought to deliver a boon for local artists, but overall there is little visibility of costs versus benefits.

There is nothing inherently wrong with SPVs. They are necessary not just for the flow of money but also for licensing of IP and limitation of liability. And they are used everywhere in the world. “The point is that SPVs are deliberately being used to hide how much money state and federal governments are handing to these shows – there is no transparency,” says a source. 

In contrast to the disparate and opaque funding arrangements now in play (for the states it’s a matter of parsing ministerial press releases), the claims of value are ostentatious, and echoed with no scrutiny by a cringeworthy media.

The press releases drip with superlatives and shots of grinning politicians, such as this for another NBC production slated to take out much of Docklands in Melbourne. It is the Hollywood remake of German sci-fi thriller Metropolis, now in pre-production.

“The Australian Government has distributed more than $372.9 million under the Location Incentive, which has been instrumental in attracting 32 international productions to Australia. These latest productions will push private investment generated by the program to over $2.84 billion, add to the more than 20,500 employment opportunities for local cast and crew, and create further work for the over 19,500 businesses that support these big productions,” declared the Morrison government media statement for Metropolis.

Jobs jobs jobs

Metropolis alone could contribute $621m in “direct spend” for Victoria’s economy. Thousands of jobs too, of course, although how many of these would be “extras” on set for a few days is not clear.

“The Morrison Government is providing $83.8 million in Location Incentive funding for a pipeline of projects, including Metropolis, with the Victorian Screen Incentive further contributing $41.6 million to the project. The Andrews Labor Government will support production as part of the $60 million Victorian Screen Incentive, which will keep Victoria at the forefront of the global screen entertainment boom over the next four years. Metropolis is an eight-part television series inspired by the seminal Fritz Lang science fiction work, which is projected to contribute $188 million to the Australian economy alone.”

It’s effusive alright. Haphazard too. As Sharon Connolly frames it, a lot of value flows offshore and the political decisions which govern content policy are so often the upshot of vested interests lobbying rather than long term vision. Film Australia had been the national production house, with a history stretching back 60 years, until it was merged with other agencies to form Screen Australia in 2008.

“In 2015, then treasurer (Scott) Morrison announced that its purpose built (and only recently restored) studio complex at Lindfield had been sold and the ($35m) proceeds given to Fox and Disney for the Thor and Alien franchise pics. The site was subsequently bulldozed. We destroyed our publicly owned production company to pay for Hollywood sequels and superheroes. And I guess to do a favour for studio owning political donors, Village Roadshow.”

Arts minister Tony Burke hands down Labor’s new national cultural policy at the end of this month. He has promised Australian content quotas for streaming services, that artists and writers will get “fair remuneration” and have access to more public funding.

For Australian artists, much is riding on Tony Burke’s new vision for content. It is to be hoped the government has taken a good look at the financing structures and benefits for the Hollywood studios too, that they are driven less by fawning to foreign interests and political headline grabbing than fiscal discipline – lest another “lost generation” looms.

How the incentives work. From Ausfilm:

“The Location Incentive grant is a merit-assessed grant where funding may be offered up to 13.5% of a project’s Qualifying Australian Production Expenditure. This grant complements and is additional to, the Government’s existing 16.5% Location Offset tax rebate. The Location Incentive grant total is AU$540 million and commenced from 1st July 2019 and is available until 30 June 2027 or until the Government advises that the Program has fully committed and expended available funds.

REBATE & GRANT

A production must be eligible for the 16.5% Location Offset first. If your project is eligible and your project’s Location Incentive application is approved by the Australian Government’s Minister for Urban Infrastructure, Cities and the Arts, this may effectively take your tax rebate up to 30% of your qualifying Australian spend. Read the full program description and access the application form here.

“The Americans already get a huge reduction in production costs due to the exchange rate and because it is so cheap to produce here and there is so much government money they do treat working here like it is some sort of holiday jaunt,” said one source. 

Although things have improved since the 1980s tax rule which delivered 100-150% deductions on production expenditure – and was exploited widely – the tax breaks and incentives are still so generous that the Australian taxpayer is in effect giving Hollywood studios a heavily subsidised overseas vacation, as one production expert put it. 

 

 

READ MORE:

https://michaelwest.com.au/fall-guys-a-generation-of-film-makers-gutted-by-australia-bowing-as-hollywoods-backlot/

 

 

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