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Wednesday, 11 November 1998
Page: 219


Mr KERR (5:18 PM) —Thank you, Madam Deputy Speaker. This legislation was introduced into the previous parliament, had passage in the House of Representatives and was brought before the Senate, and then the bill was, in the ordinary course, referred to the appropriate Senate committee, whose report, I understand, has been written but, on the prorogation of the parliament, not made available. So we come to this debate unfortunately not knowing what wisdom there might have been made available to us had that report actually been published.

I commence my remarks about the specifics of this legislation by saying that the approach that we take today will be subject to any necessary adjustment as we view the report of the Senate committee. It may well be that it recommends to us amendments that would improve the legislation or require some change to it. There has also been some minor change to the legislation itself in the form in which it was first presented to the House and now comes before us.

The change that I have noted in the short time that I have been able to do it is that the period for which the experimental scheme will be operating has been extended from 30 June 2002 to 30 June 2003. Whilst this may be due to delay in the legislation, the scheme will not commence as early in the financial year as might have been hoped and, therefore, one can understand it being extended for an extra year. But I guess it does present a difficulty in that the whole objective of introducing this measure was to provide a pilot so that there could be an assessment of whether or not it was an appropriate vehicle for additional support for funding for the film industry. It would be unfortunate if the process of assessment was delayed past the year 2003.

There seems also to be some internal inconsistency because the period for actual fundraising seems to have not been so extended. Clause 14(2) states as follows:

The total amount of concessional capital allocated by the Minister to FLICS to raise on or before 30 June 2000 must not exceed $40 million.

So it would assist to identify whether there is intended to be an extension of the period for which capital can be raised, because otherwise it would seem that, whilst the scheme has been notionally extended an additional year, that may be simply to spread the cost to revenue at no additional benefit to film producers, who will be only able to receive funds which have been invested by 30 June 2000. That would not be something that the opposition would regard as an acceptable outcome, so I look forward to the minister's advice in relation to those matters.

The Australian film industry has all the appearance at the present time of great strength and so it should because the Australian film industry has been a focus of a long period of strong government attention. Indeed, stemming from the days of John Gorton as Prime Minister, but then particularly through the Hawke and Keating years, Australian film has been a source of great pride to successive governments and investment designed to build an indigenous and strong film industry.

A strong film industry represents jobs—and if you look now at film, television and video, there are about 40,000 Australians employed in those cultural industries—and it also gives us a great sense of our own character, as we see material produced which reflects the kind of community we are. It gives us an opportunity not merely to see material from overseas but gives us also an export opportunity as film opens doors for Australia overseas.

We have had a number of films which have received international acclaim, not the least being Geoffrey Rush's Oscar for Shine. Actors have starred now through the training they have received in Australia. Most recently LA Confidential had two Australians as its leads. We have seen Australian films such as The Sound of One Hand Clapping explain to Australian communities something of the multicultural experience that many have had in this country, and they have also found a market overseas.

Film is a large and important industry. We see it as something which represents more than just jobs but which, at its core, also is an industry for the future. Content is increasingly employing large numbers of Australians and we have an opportunity, if we do not undercut the achievements of the past, to build an industry of substantial national and international importance.

Whilst the position looks very strong, whilst we have George Lucas proposing to invest in production of film for the Star Wars series in Sydney, whilst we have the BBC's Channel 4 putting independent money into film making, and whilst we have the Fox Studios, we also have the knowledge that, particularly at the developmental end, Australia's industry requires assistance from the community. The Gonski report, which formed the basis of the legislation currently before us, accepts that the market is not such that the community can withdraw and leave the industry to remain sustainable, particularly at the level of development and script, and research and development and that we do need to find innovative ways of raising funding for film.

This is particularly important because the current government has withdrawn substantial support from the Australian film industry. The recently released Australian Film Commission survey would highlight what we have achieved. Statistics from the Australian Bureau of Statistics show that Australian audiovisual production is worth about $1.3 billion. Employment figures show stunning growth in different areas of film, video and other audio vision ranging from 35 per cent to nearly 200 per cent. Figures also show that 40,000 people are employed in the industry.

Yet, whilst the government claims to foster emerging film-makers and support quality film and television products, they have cut the funding for the Australian Film Finance Corporation, AFFC, by some 24 per cent and further cuts are in store in the forward estimates. The government has also abolished the commercial television production fund. Initially, the government proposed killing off low budget film funding but after a lot of community pressure they were kind enough to reduce the funding by only 50 per cent!

I mentioned the special production funding, which is an important area because it is an incubator of talent. It is an investment in people, in projects and in the future, with all the excitement and possibilities of big-time outcomes. The social and cultural benefits which can flow from this kind of investment mean it should not be simply market based. But, since coming to office, the Howard government has cut funding for Australian screen culture by 20 per cent. Forward estimates figures show a further cut of just under 50 per cent by the years 2001 and 2002.

The Gonski report, which was the springboard for this legislation, also recommended, as a minimum, three times the funding that the government has seen fit to provide for script development. At a time when our major competitors are gearing up investment in this area, the government has not met that challenge.

This particular legislation was put forward initially to replace funding that currently goes to film under section 10BA of the income tax act. Fortunately, the government did not pursue that course and accepted the criticism from the arts community that this should be seen as a trial, to see how effective it is. They have responded to a large number of concerns from the Screen Producers Association of Australia, and others, that this legislation may not succeed in its intentions. I would hate to see either the Film Finance Corporation or section 10BA be reduced in terms of the funding that will go into this industry before we are able to see whether this trial is the success which we hope it to be.

Even if it is a success, we would need to continue to have the sources of funding that currently go into Australian film maintained so that we do not have a situation where, having built an industry and having established its framework, we then cut the ground away from those things which enable it to continue to develop, to bring in new talent, to fund low budget productions and the like.

It must not be thought that the opposition believes that all film must be funded through public funding. A lot of exciting work is being done, with no subsidy at all. But the Gonski report clearly says to government that market imperfections are such that the industry cannot maintain itself without support. It will fall over. It will not remain strong or maintain the opportunities needed for a growing investment in the future unless we provide funding mechanisms of the kind which are represented by the Film Finance Corporation, section 10BA and, of course, this present trial.

There are a couple of issues involved in the trial, and time will tell how successful it will be. It is not exactly what Gonski recommended. Gonski recommended that the tax arrangements should be that you could write off 120 per cent of the investment. He argued that this would be a means of providing an adequate investment framework. The government has chosen not to proceed down that course but rather to set the write-down to 100 per cent. Gonski recommended that there be an adjustment on capital gains so that gains that are acquired from a successful film are not rated back as if the investment were zero in the first place, so that every dollar of gain is subject to capital gains tax. He recommended that it be based on a method that really does respect that there is an element of risk venture in funding film. The government has not seen fit to accommodate that.

The Gonski proposal was also expressed in a way which dealt with continuing support for script development and small productions and, as I have mentioned, there have been substantial cuts in funding for that basic infrastructure required by a successful industry. Some concerns have been publicly expressed by those in the industry that this method of seeking investment funds in film from the business community may not be as successful as the government would hope. But there is no reason not to give it a trial. My predecessor, the then shadow Bob McMullan, said that we could support this bill provided it is supplemental to existing funding.

I would like assurances from the minister that will condition our response in the Senate. Currently, forward estimates provide that funding for the Australian Film Finance Corporation expires at the end of the current triennium. In order words, it is `zeroed', in the jargon of the finance bureaucrats, after the current triennium funding is concluded. It is widely thought that the government may review this. I would just like to say that our support for this legislation would be much less conditional if the government would simply say what many expect it to actually do in the future, and that is to say that once that triennium is completed there is an intention to enter into a future funding round for the subsequent triennium. If this is a stalking horse to kill off the funding through the Film Finance Corporation, it is retrograde and inappropriate policy, and it will be a marker for the death of a very substantial part of the Australian indigenous film industry.

We do have great challenges. Film is one of those industries which is inherently important because of its localism and the voice it gives to us as Australians, yet that voice is part of an industry which is inherently international. So we are dealing with both of those issues at the same time. Film needs to be diverse; it gives a sense of great pride. Very few Australians would not recognise it as part of their cultural traditions now, just as we once might have thought of poetry like The Man from Snowy River. We now value films like Gallipoli and all the films that we have grown up with as part of the Australian experience. To lose that would be to throw out a valued strand of Australian culture.

We must not believe that this cannot happen. It has happened before. It happened in Britain during the 1970s, where they became basically a production facility for overseas films. We have to make sure that there is a proper basis for there being a continuing and strong national film industry, recognising that a diversity of sources of funding is necessary for a diverse industry and to give us a community voice, to nourish this, to give Australians a sense of optimism, engagement and excitement, and also to make sure that there is a diversity where governments do not get involved directly in decisions about which films will be made.

Far too often we hear voices raised about films being provocative. I know that voices are raised from time to time about Australian films like Head On. It is a provoking film. But it is not, I think, a good thing for governments, when these issues are raised, to in a sense try to dictate the course of the cultural and community responses by using funding mechanisms to deal with these. That is one of the things that is actually good about this particular legislation—that government does not have any direct hands-on in relation to what projects are funded.

And this trial means, if it succeeds, that there will be more need than ever for things like the Film Finance Corporation. There are two reasons. One is that the Film Finance Corporation currently asks, as part of its criteria, `Could this film be funded from commercial sources without government assistance?' So it will sometimes turn down perfectly good proposals because it recognises that they can generate those funds from the market—and why put in public funds in those circumstances? FLICs are market based mechanisms which means that they will fund the sorts of proposals that will be attractive to FLIC investors. You will still need to have something like the Film Finance Corporation to address those proposals which cannot raise funds directly off the commercial market.

The other reason is that, of necessity, the focus of these larger film conglomerate investors will be Sydney-Melbourne. Sydney and Melbourne both have the scale to demand the attention of investors and film-makers. But there has been a tremendous amount of very good film generated from South Australia, from Tasmania recently, and from other states and territories.

It is important to make sure that there is a mix and diversity of funding sources to ensure that we do not either—as I have indicated could occur—become principally a production house for overseas investors or develop a system of funding which channels money through only established film-makers focused in a couple of the capital cities. Those would be very regressive outcomes and that is why you need a range of different funding methods to ensure diversity.

Let me conclude by saying that, when this bill first came before the House of Representatives, the opposition proposed a second reading amendment which indicated that, whilst not declining to give this bill a second reading, we would criticise the government for withdrawing a substantial amount of support for film over the past period of three years. I resile from none of those criticisms. But, in view of the circumstances in which this bill comes before us, and because everyone agrees that we should move forward as quickly as possible to give it passage in a cooperative way, I do not propose to take up time with moving such amendments. The criticism stands and it is self-evident and it ought to be addressed by this government.

We will, however, want to have a close look at the Senate report. It may suggest some constructive amendments; it may suggest that we take even further measures; it may suggest we not support it. We have not seen the Senate report so it would be useful to see it and we would like the minister to give the assurances that I have sought, particularly an assurance as to the ongoing commitment to the Film Finance Corporation which in forward estimates in the budget is not funded past the current triennium. If we felt that this was simply a stalking horse or a device to kill off the Film Finance Corporation, then our attitude would be very different. The whole basis upon which it has our support—and it has been put forward publicly—is that it is a trial supplemental to current funding arrangements which would remain undisturbed.

With those remarks I am happy to indicate that we will not oppose this legislation through the House. We look forward to it going to the Senate. We would anticipate that the government cooperate to re-establish a committee to look at it in the Senate but, as there is a report which has basically been drafted and ready for publication, I would anticipate that we could deal with the Senate inquiry in a very expedient way with a very short time required for a report. Once we see that report then, obviously, we can adjust any position as necessary.

I thank the chamber for the opportunity to make some remarks in relation to this legislation and hope that the strong work that has gone into building a great Australian film industry is not undermined by meanness of spirit. Strong as the industry currently is, we will fail if we do not recognise that that strength has grown upon a base which, if removed, will eventually cause a corrosion of the spirit, vitality and capacity of the industry to employ Australians.