Why US film makers are being lured Down Under

A film set in Sydney where American super hero movie Thor: Love and Thunder was being shot earlier in March. Picture: Matrix Media Group

Along the east coast of Australia, from the Gold Coast to Melbourne, American film studios and production houses are opening up for business.

It’s true that they are enticed across the Pacific by favourable state and federal government support programs and, in addition, Australia is relatively free from COVID-19 compared to the US.

But there is a deeper and more fundamental set of forces in the US that is driving film makers out of California. It’s bad news for the US and, potentially, great news for Australia.

Leaving aside the COVID-19 pandemic, the US is becoming an unpleasant place to do business.

Australia will benefit greatly from the skills and employment that will be generated by this filmmaking boom. Many people in these industries have or will develop skills that can be used in other areas.

We need to step back and realise that we have an opportunity in Australia that is greater than simply developing film making, albeit film making is very beneficial.

Most of the film makers were based in California, which is also the home of the IT industry, where exactly the same forces which are causing movie makers to come to Australia are impacting IT.

To understand the power of these forces I have to take you back into recent US history.

For decades the US union movement was aligned to the Democrats, but the Democrats turned their back on the unions, fostering massive job destruction as manufacturing was shifted to China in the Clinton-Obama era.

Donald Trump in his 2016 presidential campaign told the unions that he would deliver the jobs back to the areas where they had been lost.

And for the most part, prior to COVID-19, Trump delivered much of his promise. But he also turned his back on dealing with the unions and they became dangerously frustrated—even doublecrossed.

At the same time, the Democrats realised that to unseat Trump they would have to do a deal with the unions. The unions played hardball but their requirements were embraced by Democrat presidential nominee candidate Bernie Sanders who played his cards brilliantly. He pulled out of the race on condition that Joe Biden embraced the union requirements. And Biden is honouring his undertaking - and fast.

Late in 2019 the left wing forces, who were in control of the California legislature, passed the so-called AB5 act to ban most forms of independent contracting in 2020. The ban severely disrupted California and caused many IT companies to look elsewhere in the US because the whole basis of their operation revolves around independent contracting of skills that are not required 365 days a year. The Uber delivery service was endangered.

A referendum held at the same time as the presidential election saved Uber but other Californian industries remained endangered and there has been a scramble for exemptions.

Both film makers and IT groups revolve around contracting. People are employed to undertake a specific task and may work for others at the same time or alternatively when the task is completed they look for a new contract with the same group or a different group. There is no employment relationship.

But President Biden is turning a blind eye to the Californian chaos and honouring his obligations to the unions.

Accordingly a key part of his so-called PRO Act legislation, now before the Congress, is the abolition of most forms of independent contracting, which unions hate because it usually cuts them out of the action. In effect the Californian ban is being extended across the US.

But the PRO Act goes much further and it gives unions a great many new rights. In Australian terms some would be regarded as rights that unions should have, but others will effectively give the unions the opportunity to run the workplace. And, of course, whereas many Australian managers have come to understand how to work with unions, Americans have not had that experience because the union movement is relatively small outside the public sector.

Accordingly that’s going to make running American businesses a lot more difficult. US film makers in Australia have already discovered that our contracting rules are clear and akin to what America used to be. Accordingly it is easier to make a film out here even though it’s a long way from home base. I don’t think we are going to see a wholesale transfer of head offices from America to Australia, but we are going to see Australia considered as a possible site for key areas of operations.

Australia will never get this opportunity again and full marks to all those who have helped bring the film makers here, because if they find it easy to operate Down Under then word of their success will spread throughout the IT industry and other sectors.

And there is a second opportunity. In the UK independent contracting is also a mess and is mixed up with taxation regulations. Many UK IT operators, like American film makers, are looking to take some of their operations abroad. Their first port is normally India but we need to raise the Australian flag so we also become considered. The outcome for film making in Australia will help in those endeavours.

It will be very important to this movement is that we make it easy for skilled people to move to Australia. In this context Peter Dutton’s Home Affairs ministry is going to be absolutely vital.