“A gamechanger”: reflecting on a decade of the Producer Offset
While a new report from Screen Australia shows how effective the Producer Offset has been for the industry over the past 10 years, the agency’s CEO Graeme Mason says it is incumbent to consider how the incentive could be further evolved.
“And I don’t mean just asking for more of it.
“We need to leverage it more. We need to leverage it better. We need to change business practices with it in mind, to use it to ramp up activity,” he told the Screen Forever conference yesterday at the report’s launch.
Titled Skin in the Game: The Producer Offset 10 Years On, the report outlines that between January 1 2008 through to June 30 of this year, the offset has contributed more than $1.5 billion worth of rebates, broken down to $992 million on 291 features, $400 million on 309 television projects and $139 million on 582 documentaries.
Of 81 production companies surveyed by Screen Australia for the report, 91 per cent rated the Producer Offset as ‘critically important’ to the operation of their business, with many noting it provided a revenue stream that facilitated retention of staff and the ongoing development of projects within Australia.
Ninety-two (92) per cent of respondents also said their equity stake in projects had increased since the introduction of the offset, and 90 per cent also said it had lifted their revenue. It had also allowed 87 per cent of respondents to consistently produce content.
“It’s this that has helped build a more sustainable industry in the face of the constraints imposed by Australia’s limited population and in the face of the fiercely competitive international ecosystem that our industry operates within,” said Mason.
He said the report showed just how deeply embedded the offset was within the financing landscape, calling it a fundamental gamechanger. However, he stressed it could be even more so.
“For the health of the sector, Australia needs to work more internationally through co-productions and joint ventures. We need external investment and revenue to grow the industry.”
Reflecting on a recent trip to LA for Ausfilm week, Mason said he found many in the States still didn’t understand how the Producer Offset works, or more specifically, how it differs to the tax credits in places like the UK and Canada. However, interest in Australian production community is high and represents a major opportunity to exploit.
“Of particular note were meetings with agents and managers with Australian clients. Many of them are keen to work with the edgy indie material, which many of you have on your slate, and some of them are able to call shots on high-end, big material. In both instances the fact that we have offsets, which means revenues and rights can sit with you and their clients and not just with the Hollywood companies, is of real interest and something we all need to advance.”
The report also highlighted that 98 per cent of producers working in TV and streaming content don’t trade their Producer Offset equity.
“The survey showed that producers are retaining substantial equity in their projects and broadcasters stated in interviews that they understood the producer’s position and were not seeking to undermine it. However, some broadcasters noted that, if the PO was increased, this practice could be re-considered,” the report said.
In feature film, 37 per cent of producers reported trading their equity, but 86 per cent said they had retained at least half and 45 per indicated that they had only traded ‘a small amount’.
Most commonly, PO equity was traded to domestic private investors (36 per cent), foreign private investors (15 per cent) and local cast (15 per cent).
“Given the larger equity stake feature filmmakers have in their projects by virtue of the 40 per cent offset, producers are possibly more willing to trade equity ‘points’ while still retaining a substantial share. Additionally, feature films typically have more complex financial plans than TV, with more financing partners, increasing the likelihood that producer equity has to be used to close deals,” said the report.
Over two thirds of respondents also said the offset had helped them form business relationships with international broadcasters and production companies, and broadcasters reported the offset had helped them consistently commission more local content.
Respondents working in feature film said the main benefit of the offset was attracting private financiers and foreign sales agents, while those working in TV, steaming services and docos felt it had made it easier to raise finance from broadcasters.
A majority of broadcasters and production companies surveyed called for the offset to be lifted to 40 per cent for non-theatrical formats, and many also advocated for an abolition of the 65 hour cap on TV projects, as it was seen to work against production of successful series.
Whether Australia’s federal screen incentives remain fit for purpose is a key component of the Australian and Children’s Screen Content Review, jointly conducted by Screen Australia, ACMA and the Department of Communications and the Arts. It is due to report to government within the coming weeks.
Read the full report here.