TV and film business Australian Production House ‘decimated’ by government grant changes

A Melbourne woman who started her own TV and film production house stopped paying herself before she was forced to let staff go.

An Australian film business which has worked with Hollywood heavyweights said it had been “decimated” due to changes to government funding.

Louise Schultze started Melbourne-based Australian Production House in 2016 after her son took up acting, while she had also previously worked in the TV and film industry too.

“There was a discussion at the time that Melbourne hadn’t caught up with Sydney and Queensland in looking for commercially viable projects and it was still stuck in the art house game,” she told news.com.au.

“It’s a smaller state but the locations are perfect as we have white sand deserts, we have rainforests, beaches, the Snowy Mountains, so if we want, we can do anything and we can do it in one state and not have too far to drive.”

She poured half a million dollars into creating pilots of interactive kids television shows, music videos that are narrative-based like Michael Jackson’s Thriller as well as Taylor Swift’s style videos and many other genres.

The plan was to sell these projects overseas so when she discovered the federal government’s Export Market Development Grant (EMDG) – it gave her an opportunity to really showcase the best of Australia.

Initially, she was granted $80,000 the first year she applied but knew she could claim up to $150,000 a year and she budgeted this in as projects are often planned three to five years in advance.

Company founder and senior executive Louise Schultze said she budgeted everything on the basis she would be getting half of her export expenses covered. Picture: Supplied

When the pandemic hit, the 43-year-old said it was stressful as they couldn't film the traditional way but knew they had the grant to rely on.

“We created an interactive children’s network called Oz Kids network to showcase Australian content to the world and we were selling it off to the world and it was our way to show what Australia is capable of and what is possible in a pandemic – that you can still produce content in a pandemic that kids will watch,” she explained.

“In one of the shows we embedded Twitch tech, which showed an animated face with a bear so he could talk to children … it was this live thing going on. We filmed skits with this bear and made 10 episodes of kid’s shows.

“Other companies were letting people go and we were hiring. We hired 20 people, it was amazing, so we quadrupled our staff in six months from Covid.”

Filming of shows. Picture: Supplied

‘Stopped paying myself’

But Ms Schultze was shocked to discover she would only get $7000 when she applied for the EMDG grant again.

“I hired an executive producer on $200,000 a year because I was of the understanding that I would be getting 50 per cent back through that EMDG because their role falls directly into the criteria for the grant,” she explained.

“Then in the middle of all of that they drastically cut the funding and we were only able to get about $7000 or $8000.

“Covid wasn’t what killed us. EMDG made us let people go and I stopped paying myself for ages and one of my other executives did as well before we let people go.

“But you can only do that up until a point that I had to pay my home loan as we were fighting Austrade and they said there is nothing we can do. It really hurt companies.”

The government’s EMDG scheme, administered by Austrade, previously provided funding of up to 50 per cent for eligible export promotion expenses to a maximum of $150,000 a year for eight years.

But now the $1.2 million grant per business has now been drastically cut, with firms currently only able to claim a maximum grant of just $158,000 over eight years – an 87 per cent drop on what the government had been promoting.

The company is currently in early stage production of a large feature. Picture: Supplied

The popular program had been opened up to more businesses with claims 8000 Australian firms have been impacted.

In 2021, the program received 5384 applications – a record for the program, with over 2500 new applicant businesses to EMDG.

Last year, it received an additional 2723 applicants of which 72 per cent of applicants were new to EMDG.

Trying to compete with the likes of Disney

Australian Production House is currently in early stage production of a large feature alongside Hollywood heavy weights but the changes to EMDG have been devastating, according to Ms Schultze.

With hires made, Ms Schultze was left with no choice but to continue with the projects they had started and was left in major financial hardship in 2021 as a result, she said.

“When you’ve booked in a crew and hired employees and are halfway through production, you can’t just stop, you have to keep going,” she added.

“So when they cut the funding, I had to go get business loans to finish those projects which left me with about half a million dollars of debt.

“We’re not a big company, we’re not Village, we’re not Sony, we’re not Disney. But we were on an upward trajectory hiring 20 new staff in 2020 and had plans for growth and then they cut the EMDG.

“That’s one of the reasons we were stunted. So I was really badly affected … It was devastating to let staff go especially during Covid where our industry was already decimated.”

Louise Schultze said she stopped paying herself before being forced to let go of staff. Picture: Supplied

Not only did Ms Schultze hire staff on the basis of the funding she thought she’d receive but she started another company to focus solely on international expansion.

“We expanded because of the EMDG and set up Australia Media House in 2020 which was solely responsible for international marketing and sales whose work would all be able to be claimed under the EMDG,” she noted.

“So we were decimated when they cut the EMDG.”

‘Irrelevant and poor performing’

Managing director of consultancy firm Avant Group Kate Whitehead worked with businesses to apply for grants and said the funding cuts had hugely hindered the expansion capabilities of Australia’s small and medium firms.

She said this was having knock-on effects on business owners’ livelihoods and the economy and is calling on the government to bolster the grant.

“Unfortunately, the EMDG has turned into an irrelevant and poor-performing reimbursement scheme,” she said.

“The integrity measures under the old EMDG scheme meant organisations that were actively exporting, and demonstrating performance in regard to exports, were eligible; however, the recent changes have opened eligibility meaning that many more organisations can apply.

“This has resulted in a lack of funding to meet the increased number of applicants and accordingly, those organisations that have proven expertise and economic value to Australia by exporting are not being supported at a level to reflect their endeavours.”

Changes to the scheme have been criticised. Picture: Supplied

The federal government released their EMDG Operational Review last month and have indicated more changes are on the cards.

An Austrade spokesperson said in 2021 eligibility requirements to the EMDG scheme were changed which saw an increase in the total number of applicants.

“Therefore in some cases, it led to a reduction in grant amounts, as the funds were shared between a higher number of applicants,” they said.

“The government committed to, and has completed an operational review of EMDG to improve the scheme.

“Austrade intends to undertake further consultations which will consider EMDG improvements to help balance the program and support Australian businesses to grow and expand.”

Originally published as TV and film business Australian Production House ‘decimated’ by government grant changes