By Karl Quinn
The Australian government has agreed to the Walt Disney Studios' request to spend $21.6 million of government money on its latest Pirates of the Caribbean movie, rather than on the seemingly abandoned production of 20,000 Leagues Under the Sea to which it was originally granted by the previous Labor government in April 2013.
"The government is pleased to agree to Disney's request to enable earlier funding to be repurposed for Pirates of the Caribbean 5," a spokesman for Arts Minister George Brandis said.
Johnny Depp and Penelope Cruz in Pirates of the Caribbean: On Stranger Tides. The film cost $US250 million to make and has grossed more than $1 billion worldwide.
However, there is still no guarantee the film will be made here.
"Any decision to film productions in Australia (such as 20,000 Leagues Under the Sea or Pirates of the Caribbean 5) is a commercial matter for Disney," the spoksesman added.
Disney is understood to be considering a rival offer from Mexico before settling on a location.
If it opts for Australia, the total subsidy from federal coffers is likely to be much higher.
Disney will also able to access the location offset, which would enable it to claim a rebate of 16.5 per cent of any production costs incurred here. Given the average budget of the first four Pirates movies has been $US229 ($A245 million), that could feasibly amount to at least another $30 million.
But even that may not be enough to get the studio over the line. It is understood that Disney is seeking inducements equivalent to a 30 per cent rebate, the amount available to it in many other territories.
Assuming a budget of $229 million – and neither Disney nor the government will confirm the proposed budget, which is "commercial in confidence" – that would suggest the studio might be hoping for as much as another $10-$15 million, or a total of almost $69 million in government funding before committing to making the film here.
Such a contribution might be politically hard to sell in light of the coalition government's refusals to offer support to the fruit-canning and car-manufacturing sectors, but economically it makes at least some sense.
The Cultural Ministers Council in 2011 concluded that film and video production and distribution had a gross value-added multiplier of 1.8, meaning for each dollar spent $1.8 was generated across all industries. It was the highest contributor of all cultural sectors.
A government review of the scheme in 2006 concluded that, due to income tax and other recoupments the net cost to the government of the location offset and found that over the five years covered by the review it amounted to "just a little over a breakeven situation".
Such support is also seen as vital to increase continuity of employment and skills development within the sector.
The one-off grant to Disney was announced by former Labor Arts Minister Tony Burke in April 2013 in a bid to attract the high-profile adaptation of Jules Verne's 1870 novel 20,000 Leagues Under The Sea here. It was to star Brad Pitt, and to be directed by David Fincher. Both subsequently moved on to other projects, leaving the big-budget submarine drama floundering.
But the grant remained on the books - "The Australian government has committed $21.6 million in 2016-17 for Walt Disney Studios to film 20,000 Leagues Under the Sea in Australia," the office of Attorney General and Arts Minister George Brandis said last month.
On twitter: @karlkwin