The government’s review of the Australian independent screen production sector has painted a positive view of the impact of the tax offsets first introduced in mid-2007.

But lurking beneath the figures remains growing concern that the industry is not expanding at the rate that a trebling of indirect government support to $412.1 million since the introduction of the Producer Offset (and associated incentives) on July 1, 2007 would suggest. Indeed, there is some conjecture that the industry is, in fact, contracting.

The figures are clouded by two factors: a number of 10BA productions were released during the new legislative era while three big-budget feature films attracted the bulk of the rebates.

The top performer at the box office in 2009 – Mao’s Last Dancer – was funded via the previous 10BA tax deduction scheme. The second-highest box office performer, Alex Proyas’ Knowing, was controversially certified an Australian film eligible for the Producer Offset after its completion, reversing an earlier decision by the Film Finance Corporation to reject the film on the grounds that it did not meet the significant Australian content (SAC) test.

Meanwhile, the fourth best box office performer in that year, Samson & Delilah, received no indirect support from either 10BA or the Producer Offset.

Removing those films from the equation does not undermine the report’s optimism regarding the Offset’s ability to encourage more commercial films and bolster audiences – but it does temper it.

Removing 10BA films released after July 1, 2007 from the report’s comparison, the actual level of government indirect support (showing the takeup of the new incentives) falls by almost 10 per cent to $372.9 million.

And three major feature films released during that period are likely to account for between $70 to $100 million of the Producer Offset rebates: Australia, Legend of the Guardians: The Owls of Ga’Hoole and Knowing (although we can’t be sure as it is illegal to disclose under current legislation).

With Happy Feet 2, Mad Max: Fury Road and The Killer Elite in the works, the government’s goal of fostering more big-budget local feature films is being achieved.

But three major films accessing up to half of the Offset during its first three financial years of operation does not make a sustainable industry – another of the government’s key aims.

Of the local companies associated with those films, only Animal Logic is showing signs of impressive growth – and that has been bolstered by substantial (and undisclosed) financial support from the NSW government.

Meanwhile, industry concerns about the lack of Hollywood productions considering filming in Australia were given relatively short shrift in the report despite the oncoming drought.

Screen Australia’s request for an extra $30 million to fund medium budget films (revealed by IF here) is also likely to fall on deaf ears, judging by the report's focus on the Offset, although the Screen Producers Association of Australia’s commercial fund may find more backing.

These issues may simply be a function of the transition – three years is not long enough in the notoriously slow feature film world to genuinely evaluate the impact of a new scheme such as the Offset. But the issues remain.

It’s a different story in the TV production sector, where the Australian Content Standards underpin and compel local production. The sector has seamlessly absorbed the 20 per cent Offset although the documentary sector received a less than strong call for “continued monitoring” to assess ongoing issues related to administration and costs.

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