Punching on: foreign film, TV spend to top $4 billion, report predicts

More than $4 billion worth of foreign film and television productions will have come to Australia as a result of the federal government’s Location Incentive fund by the end of its eight-year life in 2027, research produced for federal Arts Minister Paul Fletcher’s office predicts.

The Bureau of Communications, Arts and Regional Research (BCARR), whose research and analysis aims “to support evidence-based policy development”, says the Location Incentive scheme, which allows foreign productions to receive a grant worth 13.5 per cent of their Australian expenditure, claims “Australia’s government incentives, high-quality screen facilities and comparatively low production costs have attracted many international film and television projects over the last five years”.

Tony Leung as Shang-Chi’s father Xu Wenwu in the Marvel film, one of 28 productions supported so far by the Location Incentive fund. Credit:

The scheme was first announced in May 2018, with a pool of $140 million. It replaced an ad-hoc system wherein individual productions would apply to the government for support on top of Australia’s 16.5 per cent foreign production offset, which is administered through the tax system (bringing it to an internationally competitive 30 per cent).

That process was slow and uncertain, and as a result it was widely believed that Australia had missed out on several big-budget projects (David Fincher’s 20,000 Leagues Under the Sea, starring Brad Pitt, perhaps the most infamous example).

In July 2020, the government extended and expanded the scheme. In full, it has committed $540 million to the scheme, which will run until the 2026-27 financial year.

To date, 28 titles have been supported – Shang-Chi, Thor: Love and Thunder, Clickbait and Young Rock among them – with a direct contribution from the fund of $273.1 million.

However, the research considered spending to the end of the 2020-21 financial year, at which time $194 million had been allocated in support of productions worth a total of $1.57 billion.

Though productions can access up to 13.5 per cent of their Australian spend, in practice the average claim to date is 12.4 per cent. If that trend were to continue, the paper says, total expenditure over the life of the scheme could reach $4.36 billion. If the full 13.5 per cent were claimed it would reach $4 billion.

At first glance, the return on investment looks extremely impressive – between $7.4 and $8.07 for every $1 spent. But the full picture is more complicated.

“Eligibility to receive the Location Incentive is dependent on receiving support from one or more Australian state or territory governments,” the paper states. Industry sources claim state support typically amounts to about 10 per cent. Factor in the 16.5 per cent available through the offset scheme and the total subsidy for a foreign production is closer to 40 per cent, with the ROI more like 2.5 than 8.

Foreign productions also have a complicating effect on the workforce and wages. While the BCARR paper says the incentive “created an estimated 39,100 jobs, including 27,800 full-time equivalent positions” in its first three years, producers in the domestic sector have struggled to find crew, studios and equipment because of increased demand from foreign productions.

Are you using that seat?: The Voice was bumped from Fox Studios as demand for crew and facilities peaked.Credit:

In April 2021, a Screen Producers Australia survey found 80 per cent of respondents faced trouble finding crew, with costs of production having risen an average of 24 per cent. The crunch on studio space also led to ITV Studios Australia relocating The Voice from Fox Studios to a former factory in late 2019.

But as Screen Australia’s drama report, published in January, made clear, last year was an aberration, with the COVID-induced backlog of production and perception that Australia was an unusually safe place to film spurring a surge in activity.

The $1.91 billion of activity last year – including $1.04 billion of foreign production – was the largest on record, by some margin. Moving forward, and with Australia having lost much of its pandemic-related competitive edge, such levels are considered unlikely to be repeated.

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