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Environment and Communications References Committee
11/04/2018
Australian content on broadcast, radio and streaming services

CAMERON, Ms Fiona, Chief Operating Officer, Screen Australia

MASON, Mr Graeme, Chief Execu tive Officer, Screen Australia

[12:46]

CHAIR: Welcome to the hearing today. Information on parliamentary privilege and protection of witnesses and evidence has been provided. We invite you to make a short opening statement.

Mr Mason : Good afternoon. Thank you for inviting us and, even more, thank you for your interest in Australian content and its economic and cultural value. Put simply, those two strands underpin what Screen Australia does and why it exists. We work to support culturally powerful screen stories and the individuals and the many businesses across the sector who create them and take them to audiences here and around the world. Screen Australia facilitates, supports and connects culture, commerce and government. We have a broad view and remit, working with many stakeholders. We assist in the creation of content for big screens, TV screens, small screens and mobile screens.

I will briefly give an outline of Screen Australia's two main support streams. We administer the producer offset, which is the tax rebate for producers of screen content, and we provide merit based funding to movies, series and other formats. This funding goes to production of high-quality, ambitious screen stories with cultural impact; the development of individual projects, screen businesses and talented practitioners; assistance for marketing, promotion and distribution; administration and support of international co-productions; research to assist government and the industry; and support for festivals, events and screen culture activities. Screen Australia funding works with other government levers, including content regulation and the public broadcasters. Government support has existed in various forms for 50 years because our screen stories will not be made by the market alone.

It's likely that much of what you will be looking at is change to the sector in terms of traditional platforms. For our part, we think the theatrical experience is still fantastic; we think the reach and water-cooler impact of broadcast TV is still unmatched. But on-demand viewing on all screens is changing everything. Audiences are in control, and they have all the options of content throughout the world. Allow me be to be clear: audience power is a great thing, and, because people are adding to their screen time, there is theoretically potential for more great Australian stories. But the rise of digital has profoundly disrupted the industry and altered the economics and accessibility of Australian content, making government support more vital than ever.

Take TV. Simply put, an Australian broadcaster can screen an hour of Downton Abbey for about $350,000 and The Big Bang Theory for half of that, but broadcasters will pay more than $1 million to create and screen a blue-chip Australian drama. But, again, allow me to be clear: Australians deserve their own drama, documentary and children's content. It reflects who we are, shows what we can become and resonates for generations. Australia's view of the first Anzacs and of Anzac Day itself would not be the same without Peter Weir's Gallipoli.First Australians, Rabbit-Proof Fence, The Sapphires and Redfern Now shatter stereotypes, change minds and open hearts to First Australians. And children need to see and hear their own country and culture. They need stories made for them like Little Lunch,Round the Twistand Dance Academy.

Our screen currency research project explores the cultural and economic value of Australian screen content, including $3 billion in value-add and 25,000 jobs. But our sector spreads wider than Australian stories. It's a complex ecosystem, mixing foreign investment and fee-for-service work with Australian IP. Casting crew on a Lion or a Sweet Country gets work and experience on foreign films like Thor. Animal Logic create brilliant animation for Lego and Avengers, but have also now branched out to create and control their own properties, with their current Peter Rabbit film, a major international hit, having passed $300 million in global cinema takings.

The screen sector constantly innovates, educates, drives trade and tourism, and pushes soft power abroad. It contacts multiple federal, state and territory departments and agencies, and we aim to be plugged-in to each step. Take tourism: more than $700 million is spent every year by the international tourists that are brought here by our screen content. Screen stories attract more tourism expenditure in Australia than the Opera House—I could get into trouble for saying that, because our chair is also the chair of the Opera House. But it is no coincidence that Tourism Australia's latest campaign stars Chris Hemsworth and Crocodile Dundee.

The screen sector has amazing achievements and great opportunities, and it has been deeply disrupted by digital innovation. With change accelerating, the interest and support of the parliament and government is vital. Drama, documentary and children's content have the biggest cultural impact and can draw massive audiences. It's also costly and risky, and, as I stated, the market alone would not make it, so governments have, to date, employed four levers to ensure its supply—public broadcasters; content or investment obligations on commercial broadcasters; tax incentives, including the producer offset; and direct funding through Screen Australia.

While existing settings have served us well, they were designed before the internet could stream video. Right now, Australia's most popular storytellers are two Adelaide twins, the RackaRacka boys, whose comedy channel has 660 million views on YouTube alone and one video that we supported has more than 55 million views. We see YouTube, Facebook and Netflix as digital disrupters but also as the new normal. It's a challenging time, but because Australians are watching more content in more ways it's really also a time of incredible opportunity.

The government's interest in these challenges and opportunities includes last year's content review, and our involvement might limit some of our answers today. As you know, we can't release findings or pre-empt decisions that might result from the review, but we look forward to your questions and aim to be as informative as we can be.

In conclusion, once again, thank you for your interest in the screen sector, which is a major economic and cultural contributor to this country. Cinema alone has the highest attendance of any cultural venue or event, including galleries, gardens and all the combined performing arts. Government interest and support are critical because Australian stories are vital to our sense of who we are and what we can become. They help us to understand ourselves and to take who we are out to the world.

Senator URQUHART: Thank you for that, Mr Mason. It paints a great picture. I was having a look through the document you provided with your submission—Screen Currency: valuing our screen industryand noticed that you've got a page on the economic value. Can you outline to the committee the economic value of the screen production industry in Australia? But, in particular, has the economic value of the industry increased over the past decade?

Mr Mason : To answer that last question, yes; definitely. That report, as the committee would know from our submission, actually looks at 2014-15. Also, to be clear, this was something we did with Deloitte; this was not just us internally. Using Deloitte's own judgement—which they do across a multitude of sectors—they said that this is a $3-billion value-add with 25,000 jobs. This is a significant economic contributor on top of, of course, the reason governments of all sides have always funded us: cultural value. I think it's vital that people like you are trying to look at the two things together.

Senator URQUHART: As a whole, is the industry likely to expand in Australia in the future?

Mr Mason : We had a great year last year. Another thing that we put out every year is a drama report, which does a snapshot of the things that went into production in the 12 months before. Last year was a record year. From memory, there was a spend of $1.1 billion in scripted drama. But that is a combination of inbound things, like Thor or Pirates of the Caribbean coming in or foreign TV shows filming here, plus local. Those two things vary. For a healthy and growing sector there are all the various bits—there are the public broadcasters, there are other commercials, there are the new players, there's inbound and there's all the other local stuff.

Senator URQUHART: So there are a variety of areas in particular that are likely to grow, into the future?

Mr Mason : They can grow or they can ebb and flow.

Senator URQUHART: Which are the areas that are more likely to grow, into the future?

Mr Mason : Obviously, a big thing that is growing at the moment is digital. The No. 1 content creator in the country—and I get into trouble all the time for saying this but it's true—isn't something which we're funding on television and isn't reality; it is the RackaRacka boys in Adelaide. Wen Jie, who's a Chinese Australian woman, has 11 million subscribers for her YouTube channel. It's those people who are leading the way in content, but a challenge for them as businesses is how that's monetised going forward.

Senator URQUHART: In your submission you outline the three ways in which a cultural product can be assessed as having value: instrumental value, institutional value and intrinsic value. Can you expand on the importance of ensuring that the Australian film and television industry continues to support the production of content that actually has these values.

Mr Mason : Again I think it's vital, because we cross everything. We exist—and I think it's the reason that governments of all persuasions have backed us, and every state and territory backs it too—for cultural value full stop. So obviously we want to make sure there are Australian voices and Australian stories. As SBS just said, to see ourselves on-screen is vital for an inclusive and good society. But, similarly, we also need to think about this as a business: where is the economic value? That can be twofold. One is purely employment. When we go somewhere—when we go to rural Western Australia or when we do Rosehaven outside of Hobart—it's a fundamental economic driver, because we come in and we rent hotel rooms and cars and restaurants and flights. Any of you who have been around a production in your neighbourhood will know we can drive you nuts.

Senator URQUHART: Yes. If you lived there if would, but it's nice to see.

Mr Mason : We drive a lot of value. And beyond that there's the potential other spillover economics that when you make a great show—you make Lion, which was a small personal story, culturally really important, about a young man's struggle to fit into a new country and be accepted and find his parents—it makes a lot of money at the same time and employs a lot of people. Lion made a lot of money for the production company to reinvest, and we had soft diplomacy beyond anything Australia could dream of by screening that round the world. When Hugh Jackman opens his mouth, everybody thinks of Australia. He came out from going to UTS in Sydney and WAAPA in Western Australia and he's proudly Australian; he's the most famous Australian.

Senator KENEALLY: This is an interesting point, and it goes to not just screens but also actors and our acting industry. I don't know if you've thought about this, but we think about the Hugh Jackmans and all of those, but the Three Billboards movie has a character in it, an actress who's Australian, who speaks with an Australian accent, and it just is. There's a character in the TV show House who's an Australian actor and speaks with an Australian accent, and he just is Australian. What role does the screen industry play in building up those actors who go out and become ambassadors? Can you expand a bit on that whole notion of diplomacy and our presence in the world.

Mr Mason : It's massive I think. Obviously, many of the most famous Australians globally are our screen performers. I worked in sports television for many years, and what many of us forget is that we don't play the right sports for many countries. We don't have brilliant football—and I mean soccer—stars.

Senator KENEALLY: Although we do have I think about nine players in the NBA, but go on.

Mr Mason : Correct, but I don't agree if you compare them to Hugh Jackman, Nicole Kidman, Cate and now the Hemsworths. Margot Robbie of course has now come up. Margot is again quintessentially Australian. She is very proud of being a Gold Coast girl and makes no secret of it. We work a lot with DFAT and in their missions around the world and many of them say that Bangarra, Indigenous art, and screen are the things that are of the most use for them. Even in pure trade terms, it opens a door. Our ex-ambassador to France told me that one of the first conversations he had with the then President of France was about the President's interest in Australian screen content. It was at the moment that there were negotiations on for a submarine contract. We aren't silly, but obviously if we can be of use at that same time with that kind of content, that's an amazing thing.

Senator KENEALLY: And Paul Hogan has apparently been very popular in the United States in terms of the legacy of those movies and their role in promoting Australia overseas. Did Screen Australia have anything to do with the remake of the Crocodile Dundee ad?

Mr Mason : We assisted Tourism Australia because obviously it was their intent to make it appear as though it were a film, so the only logos appearing on those trailers were Paul Hogan's company's and ours. Obviously we see our role as being broader. Again it was great promotion of Australian content and its importance to help across the board.

Senator KENEALLY: I've taken us off topic slightly, but I think it's important.

Senator URQUHART: I want to go back to funding in particular. Some submitters have called for Screen Australia funding to be restored to previous levels. Can you remind the committee how much in percentage terms you've actually lost in funding?

Mr Mason : We have had a series of funding cuts that amounted to some $51 million. Again, like the ABC, which appeared earlier, to date until this year we've taken that all out of overhead. So since Screen Australia was formed we've actually taken some 50 per cent out of our overhead and staff.

Senator URQUHART: So you've done that by reducing the number of staff?

Mr Mason : Internally. To be clear though: there were a few other things that we did have to cut. We reduced some of our development funding and we reduced some of our outreach to things like the state resource organisations, including in your own state.

Senator URQUHART: In terms of your development programs, what programs have been discontinued or reduced significantly because of that? What effect has that then had on the ongoing intent to have more Australians on screen?

Mr Mason : One of the things we did do was reduce slightly the money put into script development. Unlike some other organisations, like the Australia Council who pass money onto other entities, we're actively involved in every step of the way. We have teams who give notes on scripts, because we have people who come in and out from the industry. We reduced that marginally. We reduced some of those things, but, as I said, to date we've tried to quarantine our support of the industry to grow. Any further cut would become problematic.

Senator URQUHART: What are the means to ensure that Australia remains a competitive location?

Mr Mason : 'Location' I'm assuming would be referring to inbound things to come and film here?

Senator URQUHART: Yes.

Mr Mason : Again it's a complex situation. There are many people suggesting that the location offset is too low to attract people.

CHAIR: In comparison to other countries?

Mr Mason : Correct.

Senator URQUHART: I understand that it's 20 per cent at the moment?

Mr Mason : No, it's 16½ for foreign films coming in, it's 20 per cent for television and digital content and it's roughly 40 per cent for features. However, it is an ecosystem, so one of the things that we have been working with the department and government on is how we could do a more holistic thing to make us more appealing. Are there ways to work more broadly with the talent we have here, for example?

Senator URQUHART: In terms of the location offset, what percentage would be required to make Australia a competitive location? Is it 20 or 30? What is it?

Mr Mason : It's slightly difficult for me, Senator. That's one of the things which is being looked at in the current review.

Senator URQUHART: Which is what you talked about.

Mr Mason : Which we're currently working on.

Senator URQUHART: Thank you. I don't have any further questions.

CHAIR: First, could I ask you up-front: have you seen the final report?

Mr Mason : We've worked very closely with the department. We, ACMA and the department are taking the lead on that into government.

CHAIR: I know you don't want to talk about it, and that's fine, I just want to know whether you've seen it.

Ms Cameron : We've contributed to a report. The department is the lead agency, so they've pulled all that together to provide findings to the government, so we've contributed something to a report.

CHAIR: Have you seen the final recommendations?

Ms Cameron : No, that would be a matter for you to address to the department.

CHAIR: Have you been given any indication when the report will be made public?

Mr Mason : No. Last time we were at senate estimates, which was not very long ago, I think both the department and the minister said they would respond in due course. I think the minister—

CHAIR: Imminent or something?

Mr Mason : Imminent—I think you might have asked, Chair. I think he said—

Ms Cameron : I think the comment was the review is ongoing.

CHAIR: Thank you. I wanted to go to some of the issues in relation to the role that you play in all of this, because it's quite a unique position that you're in. Firstly, we've got these figures about the industry overall contributing—it's obviously over $3 billion in today's terms, as opposed to 2014-15. How much of that comes across Screen Australia's desk, in terms of the projects that you're investing directly in or supporting in some form?

Mr Mason : Again, Senator, it's a little hard to quantify because we have the two strands. Obviously, we have the direct investment, which is one thing, and I'll come back to that. Then, secondly, there's the producer offset.

CHAIR: Yes, which you administer.

Mr Mason : Which we administer, yes. Obviously, we supervise that on behalf of government to ensure it's fulfilling the aims and ambitions. That can leverage up quite enormously, obviously, because that's a big deal. On a five-year average, it's running at about $200 million a year. Our direct funding is more in the $80 million range—

Ms Cameron : That's where we get $80 million from the government.

Mr Mason : that we traditionally have been seeing, that normally our investment in direct projects—because a lot of our things are grants, too, particularly at small levels, so it's a little harder for us to maintain exactly how that's leveraging up and out.

CHAIR: Has that $80 million grown or shrunk?

Mr Mason : Shrunk.

CHAIR: What was the high-water mark, and when was that?

Ms Cameron : It was over $100 million four or five years ago.

CHAIR: And that's directly in relation to that fund? That's not as a result of an efficiency dividend?

Mr Mason : No, they were actually cuts to us, including some of the things that were disbanded.

CHAIR: You obviously play a role in helping even to facilitate deals done to get projects off the ground. Can you give us an indication of whether you see the overall arrangements and deals at the moment getting better or worse in terms of bang for buck for Australian content?

Mr Mason : To put it in perspective, I've worked for 25 or 30 years all around the world. I've worked for big studios, little independents and network TV. Interestingly, there is a lot of money, potentially, around at the moment—inbound, to make things. There's less here. It's very much dependent here still on the federal and state governments and the networks. The challenge for the local producers and businesses is tough, because it is very hard when you are competing in a global marketplace with big companies. That becomes even harder. Screen Australia was actually having to work with people like SPA much more closely to try and ensure that the businesses—whether they be a big production company or an individual camera person, because they are a business—how we can assist them to ensure that they're getting not just fairly recompensed on that show but they're getting some interest in the potential of it as it goes offshore and makes money. In my life, that's the biggest value, which has always been attributable to your screen content. Beyond its cultural impact immediately, it's a long-term potential income earner. We all watch repeats of things. We all—

CHAIR: If you like something, you go back to it.

Mr Mason : Correct, and I think that's a big thing that people underestimate—that that's a cultural value in the long term—but we've got to continue to have a place to ensure that those people who created that IP share in that potential upside.

CHAIR: You make the point that an individual camera person is often their own small business. What leverage do small businesses have in this if they're being squeezed by the big corporate production houses coming in? How do we help small businesses leverage?

Mr Mason : I think one of the great things about you doing exactly what you're doing here is recognising that it's a very complex and complicated ecosystem. This week, Zareh Nalbandian, who is the producer of Peter Rabbit and the creator of Animal Logic, the very successful post-production and facilities house, sent me a signed poster of Peter Rabbit, and on it he said: 'Thank you so much for helping us to get this made. Without you, this wouldn't have been possible, and the 1,700 Australians who worked on this thank you.'

CHAIR: 1,700?

Mr Mason : 1,700—again, even though on screen that doesn't look more than—

CHAIR: That's more than the Adani coalmine is going to create, actually.

Mr Mason : It is a very interesting thing about how we can help those business units continue. Again, I would suggest looking at Zareh and Animal Logic. That's a clean, green, future-looking business. I think one of the challenges for government, more broadly, is to help us work across trade, innovation, not for a second forgetting culture, because that's why we get all the money in the first place, but looking more broadly across government.

CHAIR: You say there's potentially a lot of money around, because there's diversity in what's being created. People are watching things more than ever before, right?

Mr Mason : There are new players. You have Netflix and Amazon. Facebook have started commissioning content. We know they will do more of that. The landscape will continue to change. It will not have the big American studios and networks in 10 years time and maybe not even five. You see the takeover of Disney and Fox, or most of Fox. I don't think you've seen the end of that. That provides huge opportunities but a massive challenge at the same time.

CHAIR: You've got to make sure smaller players aren't squeezed out in the midst of that or relegated to contractors who then don't have that access to the IP.

Mr Mason : Netflix is an amazing player to come into town. It's fantastic. We've had quite a lot of projects made with them or that they've acquired, and that's a brilliant thing, as long as it's a new entrant into the market that doesn't just—

CHAIR: Gobble up—

Mr Mason : Gobble up and there's nothing else left. If it replaces the others, that's a problem. If it's a new entrant, isn't that wonderful?

Ms Cameron : And Australian content can't afford to get lost in this additional diet of content, which is fantastic for audiences. Netflix coming in has been great, but, ultimately, Australian Netflix has only 2.5 per cent Australian content on the service, which is less than Netflix has outside Australia. That's a problem for audiences.

CHAIR: Can you say that again? If you're accessing Netflix here in Australia, it's 2.5 per cent. But if you're accessing Netflix overseas and looking for Australian content, there's more?

Ms Cameron : There's more Australian content by virtue of rights management and issues like that. That will rectify over time. Netflix has had its first commission into an Australian program, Tidelands. That's the only one in 2017-18 that they've produced for first release on the Netflix Australian platform.

CHAIR: Is that something they've sought direct funding for? Are they eligible for the offset?

Mr Mason : They're eligible for the producer offset if they're working with an Australian production entity—so, in that instance, they are. That is a show created by a great company called Hoodlum, which is based in Queensland, so that's a fantastic opportunity. They would be eligible to apply.

CHAIR: But they haven't as yet?

Ms Cameron : We were in development.

Mr Mason : We did the development on the show. One of the issues is that the offsets operate under tax secrecy. We can only discuss whether someone got it if they've disclosed it—so I can on something like Mad Max or Peter Rabbit. They've very publicly talked about the support from the government and arts.

Ms Cameron : As far as the development of Tidelands, we were in there with the television in development fund. As far as direct support for Tidelands, it's right to say that Screen Australia isn't in there. Netflix have picked up that amount and, undoubtedly, it will be an expensive production. It's the only one to date. It's a very small amount of money being expended by Netflix compared to the huge amount of money being expended by the commercial television networks and, of course, the subscription television networks and the public broadcasters here in Australia. It's a drop in the ocean.

Mr Mason : It is having a knock-on, as the two previous people mentioned, on audiences. The cost of local drama is going up, but the live viewing is a bit challenging, particularly for a commercial.

Ms Cameron : Quality of productions has gone up, expenditure's gone up, but hours have retracted.

CHAIR: I found it interesting, however, that even at the moment we can't ascertain how much is being viewed on catch-up services if they're screened on televisions.

Mr Mason : And good luck getting anything out of the big players—the Netflixes—because they don't divulge that to anyone anywhere, even the studios.

Ms Cameron : Getting audience figures is quite challenging.

CHAIR: Is that something that requires adaptation, in terms of government policy, to deal with that? If we're talking about government money needing to be spent for cultural reasons, diplomacy reasons, local jobs reasons, then, as members of parliament and representatives of government, we have to be confident about the figures we're talking about.

Mr Mason : I think what the over-the-top players would say to you is that they're putting up an awful lot of money on these shows and they're giving it a lot of attention. It's getting what we as Australian taxpayers would hope for from it.

CHAIR: Except when they argue that they can get rid of their quotas because no-one's watching their shows—

Mr Mason : Sorry, you mean the commercial—

Ms Cameron : Over-the-top obviously don't have any quota requirements. Commercial television have quota requirements. Subscription television have expenditure requirements.

CHAIR: What is your view specifically about quota requirements on streaming services like Netflix, and even Stan and Amazon? If Netflix currently only has a library of 2.5 per cent, despite all of the marketing that they've done to the Australian audience, that's pretty low.

Ms Cameron : Something like two million households are watching—and $240 million conservatively of revenue for Netflix in Australia. They've done extraordinarily well in a very tight time frame here in Australia.

CHAIR: Very fast.

Ms Cameron : You ask a question that's very difficult for us to answer in many ways. You can look at international models—what's happening in Europe. You can even go back to the 2011-12 Convergence review, where it was recommended that a form of a uniform content scheme be administered whereby, once a platform hits a certain influence and scale requirement, an expenditure requirement or a revenue requirement is required from that platform. So, potentially, Netflix would be at that level of scale and influence. It would depend on where you put it.

Mr Mason : I think you'll find that many other places—Canada, the EU, particularly France—are looking at some of these same challenges.

CHAIR: Canada has made quite a thing about this recently in trade negotiations, yes.

Mr Mason : And the Canadians got an agreement, I believe, from Netflix for half a billion of spend to happen in Canada.

CHAIR: Half a billion?

Ms Cameron : Over five years; so $100 million a year over five years, and some money for professional development. Arguably, they may have been spending that anyway. People are saying that's great, and people are saying that's not as good as it sounds. But ultimately there is a deal on the table with Netflix in Canada. That is progress.

Mr Mason : That's public.

Ms Cameron : The Canada environment is extremely difficult. There are quota requirements, there are expenditure requirements and there are revenue requirements from different platforms whether you're a distributor or a television service provider or a subscription television service. It's a very complicated scenario. There are lessons to be learnt.

CHAIR: But there must also be a very strong cultural imperative. We all know you don't accuse Canadians of being American!

Ms Cameron : They've got language issues as well!

Mr Mason : Yes, very true! There are specific challenges for Canada, absolutely.

Senator KENEALLY: I'm lost. I've never heard of this—no, I'm kidding!

CHAIR: So you're saying Screen Australia doesn't have a specific way forward, but you do believe that there is a space for some type of requirement?

Mr Mason : We work across the whole sector, so we understand the commercials' point of view and we understand SBS's point of view—which is different to the ABC's—and even NITV, which sits within it. We work with Foxtel. We work with Google. We work with everybody to try and ensure there is great content made. Each person will have a different view. But, to answer your question, it is undeniably true that broadcast and cinema have fundamentally shifted even more in Australia very recently because of Netflix. If/when Amazon, Facebook, Apple et al do it as well—in cinema attendance, we recognise that the percentage that is available of the box office revenue for smaller independent films is lower because—this is just an observation—I think many people are so time-poor that they are now more likely to watch that kind of content on Netflix at home than go to the local art house. You will definitely go to the cinema to see big glossy films or an event piece—

CHAIR: But art houses and documentaries and things—

Mr Mason : It can struggle—again, the same problem the free-TVs have said to you, and even the ABC and SBS. It is very much a changing landscape. The concern to us is: how do we, with your assistance in every state and territory, ensure that those Australian stories are still available? I'm agnostic on which screen it's on; there just has to be those stories in the industry.

CHAIR: Do you think that, without some type of quota or requirement or a mixture of other government intervention, the sector just wouldn't be able to thrive?

Mr Mason : Everything except Hollywood and Bollywood has government assistance and intervention. Even China at this point, though they probably don't need it now, have reached such a tipping point.

CHAIR: What does China spend on local content?

Mr Mason : They have incredible rules. At the moment, only a very limited number of foreign films are allowed to be imported. Even beyond censorship rules, you literally can't get an import licence. Everything that comes in has to be approved by government censorship. It's very, very hard to get money out. I guess what I was trying to indicate was that Bollywood and Hollywood sustain themselves. Every other country in the world that has a version of us does it because they think that the Australian or the British or the Scottish or the Canadian cultural output matters. Let's take the example you used. You could buy two episodes of The Big Bang Theory for $170,000. Making one of Channel 9's dramas, which we are thrilled to work with them on, will cost in excess of $1¼ million for an hour. So, even allowing for government intervention, which we may do twice, equity and the offset, the cost to them is still substantially more than Big Bang. Those shows rate better than Big Bang, but not three, four or five times better. The idea that you could leave the market to do it alone—

CHAIR: I see.

Mr Mason : Even if you're Kerry Stokes, who's one of the biggest champions of Australian content, on Seven West, the maths just doesn't add up without some government support and regulation.

Ms Cameron : That was the premise of the inquiry—to say: 'Australian content is important. We need to ensure that it survives into the future. How can we do that?'

CHAIR: I want to ask specifically around the cap on episodes for the offset. Has Screen Australia got a specific position on that?

Ms Cameron : Once again, those views, considerations and options have been fed into the inquiry, so we've done that.

CHAIR: Sure. So it's set at 65?

Mr Mason : Correct.

Ms Cameron : It caps out at 65. That's right.

CHAIR: When was that set? That was before on-demand streaming services and binge watching, effectively?

Mr Mason : I think it was set at the beginning.

Ms Cameron : At the very beginning of the legislation, when the legislation was introduced.

Mr Mason : So 2007-08. I wasn't even in the country but I'm assuming that that was probably to do more with soaps.

Ms Cameron : It was. It was the Neighbours, the Home and Aways, for when you reach a certain amount you don't—

CHAIR: You should be sustainable.

Mr Mason : Correct.

Ms Cameron : I think average spend on series is now over $1 million.

Senator KENEALLY: I have one question about the cost of drama and the cost of this type of production. I apologise if you put part of this in your submission, but do you have any comparisons in terms of similar nations? I'm thinking particularly of Scandinavian nations, which have really taken great leaps forward in producing locally based drama. Have they increased their government support? Have they made it a specific policy determination in such nations to fund that type of content? What has driven that? Do we have any relevant nations we should be looking at as a committee, to see internationally where governments have made these decisions to put that type of funding in, what's driven that and what the outcomes have been?

Mr Mason : I think every country is struggling with the same issues that you are and we are. Scandinavia has had great success, and Israel, interestingly, is another one. I hate to say this, but it's almost more like lightning in a bottle than specific great programs. It's less to do with something where we could say, 'If you could give us X and we spend it on Y.' What they have done for a very long period of time, though, is encourage and foster that creativity and recognise that those voices, culturally and business-wise, matter. This is a longwinded answer. I spent a lot of my career working in the UK, and a big thing there is that, whether you are Tony Blair or David Cameron, the recognition that culture is an incredible contributor to the country, that every time Adele sells an album or Stella McCartney sells an outfit it helps 'Brand Britain', has been there for such a long time. It helps.

CHAIR: How much of the $80 million you've got for direct funding do you spend on kids television, kids content?

Mr Mason : It varies, but we spend, normally, between $7 million and $10 million on kids TV, and then separately we also do kids features.

CHAIR: As in feature films?

Mr Mason : Yes, things like Paper Planes or Oddball or Blinky Bill.

CHAIR: Would you be able to take on notice the 2016-17 figures?

Mr Mason : Absolutely.

CHAIR: That would be helpful.

Mr Mason : Do you want titles as well, if we've got them?

CHAIR: That would be great, yes, thank you. I just want to ask about this issue of how we deal with ensuring that Australian creators are not left out in the cold. Who drives the hardest bargains? There are obviously the commercial broadcasters, free to air, and then there are the streaming services.

Mr Mason : What we find actually the worst is that normally in film and telly, less in digital, it's made up of a consortium of people, as David Anderson mentioned before. It's the last bit of money that normally comes in. In film terms or in big high-end drama that's often called 'gap', and you're actually getting that from a lender. So the lender is loaning against future income, which may come from sales or secondary revenue. We often see that being quite extortionate. Part of the problem for local production entities, even those big ones that are part of an international company, is that they are probably less exposed to the global marketplace because we work here often in isolation. So that's a real challenge. Since I've been here, it's been a big focus again to work with people like SPA in how we can collectively help educate—and I mean that properly: how we can help and assist—people to understand the marketplace they are working in, because it is now global.

CHAIR: Do you believe it's your role to police those types of arrangements?

Mr Mason : Absolutely. Screen Australia on the same day will be accused of overreach by giving notes and comments on every aspect of a deal, but at the same time, on the same day—just last week, a very, very large Australian company insisted that I personally sat in a meeting with them with an end user because, they said, without us in the room they would be—

CHAIR: Screwed?

Mr Mason : steamrollered. I think it's a little bit horses for courses. As I say, we have a great relationship with people like SPA and most of the producers. We've got a great relationship with the Writers' Guild, the Directors Guild and the MEAA, and I think it is our role to make sure that, if people are getting steamrollered, they know how and why. Ultimately, that can be their decision. I'd rather they didn't, because I want sustainable businesses.

CHAIR: Yes. What's the role for commercial broadcasters in things like accessing the producer offset? There's a bit of a push for in-house production.

Mr Mason : What the networks are very keen on is being able to, as you say, do it in house. They would be eligible almost certainly for the producer offset, but what they're looking for is to be eligible also for Screen Australia's direct funding. Again, that is just a question, I guess, for government and people to determine: what are the levers, and what are we trying to end up with on screen?

CHAIR: Do you directly fund drama through Foxtel?

Mr Mason : Yes.

CHAIR: How do you balance that argument that's been put to us by SBS that public money, direct funding, should be available on a free-to-air window; the public's already paid for it?

Mr Mason : I should actually just clarify, obviously, as Ms Cameron just mentioned to me. We fund, obviously, production companies. In that instance, Foxtel don't produce. So we are involved in Picnic at Hanging Rock, the much-anticipated TV series coming through, which we did with FremantleMedia and Foxtel. I guess also, having spent a lot of time working in cinema, what I would suggest is that we put a lot of money into Lion. You had to pay $15 at the cinema to go and see it. So the argument would be—Michelle Guthrie's predecessor was strident to me, saying that we shouldn't fund Foxtel, but Peter Tonagh was quite strident to me, saying that the ABC's double dipping, so it's government times two or even times three.

Ms Cameron : They would be publicly funded and access our direct fund.

Mr Mason : And they access the offset potentially. What we were saying is that we work across the sector.

Senator KENEALLY: That's just government. You take from one pile and put it into another.

CHAIR: It's different to commercial.

Senator KENEALLY: ABC does not have the capacity to raise revenue the way Foxtel does.

Mr Mason : Agreed. I was just flagging to you the kind of thing that we get thrown at us. The line that we use more, though, is that we fund film, which you have to pay to go and see in the cinema.

Ms Cameron : But ultimately our slate is diverse. If it were all going on Foxtel, that would be a problem. In fact, the majority of our funding for drama and documentaries does go to the national broadcasters, and we do fund based on quality, culture, innovation and those thresholds. That's always looked at.

Senator KENEALLY: In your funding criteria, how much, if any, is the ability to be seen by Australians part of your decision-making?

Mr Mason : We would look at it. As Ms Cameron said, we try to balance across where it goes generally, but almost all of our television funding ends up on the free-to-airs and predominantly, honestly, on the ABC and SBS.

Ms Cameron : Ultimately, I note, Wentworth is coming to the ABC. We were in only the first series of Wentworth. It was successful enough that it didn't need us going into the future on Foxtel. It might have taken a while, but it is getting to a free-to-air national broadcasting network.

CHAIR: Thank you for your time. Perhaps once we've got the public document we'll get you back and you can answer some of these other questions. Obviously Screen Australia has thought long and hard about what's going on with children's television. That's where the debate is really the most pointed in this space. Do you have a concern that, without regulation or intervention and a direct focus on kids television, it just won't exist?

Mr Mason : To walk slightly carefully: I think kids are a focal point of Australian content generally. If, as I said, you can buy The Big Bang Theory much more cheaply than you can make Australian content, kids content you could buy really cheaply. You could buy Canadian content or something else.

CHAIR: New Zealand.

Mr Mason : New Zealand. So we think it is imperative culturally that there are Australian children's voices on screen and that they get to see themselves. I think that's essential. I think that, if you just look at the economic model, without a combination of support and encouragement of some description—but the sector also needs to work out how we can do content that they can monetise in some way, shape or form. If it's just dead air time, that also is a bit not sensible. So I think it is a combination of what the market really needs but also encouragement and support. Without kids stuff, the sector will disappear.

CHAIR: We're over time, but thank you. We really appreciate it. We might get you back closer to the reporting date. That is today's session. The committee is now adjourned.

Committee adjourned at 13:38