Australia, already one of the world’s biggest hubs for international film and TV production, has increased and streamlined the ‘Location Offset’ scheme that is at the heart of its ability to attract runaway productions.
The Location Offset will be increased from its current 16.5% rebate of Australian qualifying production spend, to 30%. At the same time a discretionary 13.5% grant scheme will be merged into the offset system. Both changes are effective from July 1.
The moves were announced on Wednesday as part of the 2023-24 national budget by federal treasurer Jim Chalmers. His decision involves the injection of an additional A$112 million ($76.2 million) into the system over the next four years.
(Separately, A$286 million [$195 million] over five years will go to Creative Australia and on to four new arts bodies: a First Nations led body, Music Australia, Writers Australia and Creative Workplaces. A further A$535 million [$364 million] will go to nine museums and art galleries for the preservation of their materials.)
Having lobbied for the changes, location attraction service Ausfilm gave a warm welcome to Chalmers’ decisions and said they would “deliver a significant boost to the Australian screen industry and broader Australian economy by providing certainty and stability for international film and TV productions.”
“A permanent 30% Location Offset will ensure a robust pipeline of both physical production and PDV (for post-production, digital and visual effects) work into the future and cement Australia’s position as a leader in the global screen industry,” said Kate Marks, Ausfilm CEO, in a statement.
“Today’s announcement to transition to a 30% Location Offset will streamline the process and provide long term certainty to international clients looking to invest in Australia.”
Over the past five years, 40 international productions have been secured for Australia generating over A$3.28 billion 9$2.23 billion) in private investment, 22,200 employment opportunities and work for over 23,500 Australian businesses, confirming Australia’s status as a world-class production destination, Ausfilm said, quoting research published in February by consultancy firm Olsberg SPI.
Major productions to have shot in Australia over the past four years include: Marvel’s “Thor: Love And Thunder,” Universal’s “Ticket To Paradise” and “Metropolis”; Legendary Entertainment’s “Godzilla vs Kong 2,” Warner’s “Aquaman” and Netflix series “Heartbreak High” and “God’s Favorite Idiot.”
Since 2018, Australia has operated a three-legged package of taxpayer-funded production incentives: a ‘Producer Offset’; a ‘PDV Offset’; and the combined Location Offset and Incentive. The Location Offset will now align with the 30% PDV Offset.
Olsberg’s report identified the Location Offset and Incentive as a source of uncertainty within the otherwise successful system. “There are two fundamental issues that are affecting growth scenarios negatively. The first is the uncertainty surrounding levels of future funding. The second relates to the complex arrangements involved in identifying at what percentage level the incentive will be available. This puts Australia at a competitive disadvantage, amid calls for establishing a certain 30% level for the Offset and removing the discretionary Location Incentive,” the report said.
The Olsberg report said that the wobbly location offset system generated two further risks.
Without the certainty of the single 30% system PDV work is endangered. That’s because, “PDV work is done in proximity to the location shoot, and – increasingly – captured in camera through volumetric soundstages.”
Olsberg also argued that uncertainty over the location offset was slowing investment in physical production facilities. “There is no doubt that investors in new stages are holding back their plans for new studio provision, urgently needed because of constrained capacity, because of the uncertainty around this particular offset,” the report said.
“Increasing the Location Offset will result in meaningful benefits for the entire sector and the economy related to jobs and training opportunities, innovations in technology, infrastructure development, along with direct benefits to businesses not dedicated to the screen industry (e.g., construction, education, hospitality, security, travel, real estate). It will also drive significant benefits to regional locations and businesses,” said Marks.
“International clients have demonstrated their willingness to work with us on skills and training, and this decision provides a big opportunity to build the industry’s capacity across infrastructure and skills into the future,” Marks continued.
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