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Wednesday, 24 August 1983
Page: 182

Mr COHEN (Minister for Home Affairs and Environment) —by leave-The revised assistance package to the film industry announced by the Treasurer (Mr Keating) marks a change in emphasis in the Government's film policy. The Government has taken steps which it considers will lead toward a greater concentration of creative and other resources on high quality films with prospects of commercial viability. In assessing the effectiveness of the deductions the Government has become concerned that they have created conditions whereby an increasing number of films of doubtful merit are being promoted to the public by commission agents who neither understand the industry nor have its best interests at heart.

I am informed that film proposals to the value of $200m were actively promoted to the public during June last. There is no doubt that very many of these proposals were without fundamental merit. Fortunately few of them succeeded in raising finance. However this may well have been more through a lack of time on the part of their promoters to develop momentum than through shrewd judgment by the investors. In any case, the activities in the market-place of the promoters of these doubtful films has been to the detriment of producers and has denigrated the high reputation of the industry. Another 12 months under present conditions could well have done irreversible damage to the industry.

In the past far too many films have not reached an acceptable standard of quality or achieved commercial success. This militates against the long term stability of the industry. Much effort has been wasted by Ministers and my Department in the certification process in considering proposals for films that were never likely to enter production.

Since the taxation incentive scheme for films has been in operation my Department has been inundated with over 1,200 applications for certification of films. As at 1 August 1983, 838 provisional certificates have been issued for:

Feature films 283 Telemovie 67 Documentaries 456 Mini series for television 32

The corresponding figures for final certificates, which are issued at the completion of the films, total 136 comprising:

Feature films 45 Telemovie 7 Documentaries 79 Mini series for television 5

Although there is an obvious time lapse between the issue of a provisional certificate and the completion of a film the figures confirm that the fall-out rate for the industry is indeed high. The government has, therefore, reviewed its support for the film industry and, as announced by the Treasurer in his Budget Speech, has decided on the following:

The tax deduction of 150 per cent of capital expenditure on a qualifying Australian film under Division 10BA of the Income Tax Assessment Act to be reduced to 133 per cent;

net revenue exemption from income tax to be reduced to 33 per cent of investment in such films;

production of films of high quality with potential for commercial viability to be further encouraged by government investment through the Australian Film Commission;

$5m to be provided for this purpose in 1983-84;

the revised scheme to remain in place for two years; and

the revised basis of deduction to apply with respect to expenditure incurred by an investor under a contract entered into after the date of announcement of the changes.

The essential elements in this package are the provision of direct support to quality film production through the Australian Film Commission, and a slight reduction-I emphasise the word 'slight'-in the level of tax concessions to the industry. These concessions, however, are still extremely generous and should be adequate to encourage serious investment. Taking the two elements of the revised scheme together, the overall Government assistance to the film industry will be increased.

I am aware that, in the rather brief mention of these two changes by the Treasurer in his Budget Speech last night, some people, who did not hear the whole package together, gained the impression that, in effect, there was a reduction. This is not correct. The small changes effected, by reducing the tax deduction from 150 per cent to 133 per cent, mean a net saving of revenue of about $4m in one year. However, we are providing the Film Commission with $5m. So, there is an actual increase in the amount of money being provided by the Australian Government, through the Australian taxpayer, to the film industry. There has not been a net decrease in the funds available; there has been a net increase. This was not explained properly in the Budget Speech last night. We have just held a Press conference to explain the details to people.

The stability provided by the decision not to change the scheme for at least two years will be an additional stimulus to investor confidence. Under the scheme, the Australian taxpayer is still making a very large contribution towards every qualifying Australian film that is made. No other industry receives such a contribution. The results achieved by the tax benefits are tangible. There is a sharpening of our cultural and national identity and increased employment, but there is an upper limit to the price the Australian taxpayer can be expected to pay, particularly if a considerable number of the films are not achieving what is expected of them and if some unscrupulous people are making rubbish just to take advantage of tax write-offs. This incidentally is not just the view of the Government. Many organisations and individuals have expressed similar views to me. Anything up to 90 per cent of Australian films are subsidised in one way or another by the Treasury. The taxpayer has the right to expect that his tastes are taken into account also as he is a consumer of Australian films. The enormous success of The Man from Snowy River in Australia confirms this.

Investment by the AFC in those films it deems to be of high quality with strong possibility of commercial success will, I believe, bring to bear a desirable influence which will enhance their attractiveness to other investors and thereby provide them with the competitive edge in obtaining production funds. I am confident therefore that by increasing the AFC's investment capacity a greater proportion of high quality films will be made which are an expression of the Australian culture and have the potential for commercial success in local and overseas markets. I am advised that in assessing projects the AFC has regard to Australian content, originality, quality and commercial viability. These same criteria will be applied together with an emphasis on intrinsic cultural merit for those applications seeking investment from the special fund provided in the Budget. I make the following point to honourable members opposite. Some people suggested that maybe that was bureaucratic decision making. I remind honourable members that up until 1980, before the 10BA legislation occurred, almost all investment in the film industry in Australia was as a result of the funds provided by the various film commissions, national and State. In fact, 60 per cent of funds invested in the film industry came from these bodies. Now something approximating 10 per cent of investment in the film industry will come from government funds. So what is occurring is not unique. We are simply restoring something of the situation which prevailed prior to 1980.

A stable future for the film industry will provide long term employment opportunities for the many Australians working in all sections of this diverse area. The Government has also paid careful attention to the training needs of the film industry. This year the Government will provide $6.7m to the Australian Film and Television School for its full time courses, its nationwide program of short courses and its national diploma course. This represents a 14.1 per cent increase on last year's allocation for the school. I believe that there is bipartisan support for the film industry and genuine pride in its achievements. Indeed, we all wish to see the industry not only survive but also thrive. We all recognise that the industry has helped a great deal to put Australia on the map internationally in an unprecedented fashion. The cultural benefits to Australia are obvious and immediate. The less obvious and more long term benefits will be in the areas of trade and tourism. Australians are finding a new sense of national pride and identity through the medium of film which is rediscovering our history, examining the social questions that plague our present society and helping to mould the Australian of the future. It is with such objectives in mind that the Government has reviewed its policies for assistance to the film industry.

I conclude by simply saying that over the past 13 years since the Gorton Government took some excellent initiatives through the work done by people such as Phillip Adams, Barry Jones, Peter Coleman and Tony Buckley, the industry has undergone a number of changes. There has been something like five or six changes . I am not critical of the fact that changes have had to be made. We are working in an extremely difficult area. In the United States nine out of 10 films fail commercially. In Australia five out of six fail to show a profit. I think that it was necessary to make the sorts of changes that have been made. It has been difficult, both for this Government and previous Liberal governments, to find the magic formula. I cannot guarantee that we have found it. A process of fine tuning has been going on. I applaud the Government for introducing the 10BA legislation, but we subsequently reached the stage where I think some minor changes needed to be made. I believe we have made them.

As I said before, we have had to go through the process up to 1970 whereby films were written off over 25 years. Nobody invested in films. Then we moved into the film commission era where investment was made by the various State and national corporations. That also had its weaknesses. The Liberal Government then introduced the two-year tax write-off. Nobody invested. Next we had the 10BA legislation with 150 per cent write-off. There was a flood of investment in films-too much in fact-to the point where we had an enormous high one year and an enormous low the next year. Changes were made early this year to extend the period that a film could be made to two years. Once again we face problems. What has been going on over the past 13 years is a fine tuning process. These changes are part of that process. I am confident that they will make the industry more stable.