A post regarding a piece of Australian federal budget news on film investment policy – which points to a whole set of questions about the political economy of investment attraction and (sustainable) industry development.

The following Sydney Morning Herald article indicates that the Australian Government is planning to increase the refundable tax rebate for local film and television production as part of a A$283 million package.

Domestic film productions will receive a 40 percent rebate, other productions (eg television) will receive 20, while international films will attract a 15 percent rebate (up from the current 12.5%).

On the one hand, providing tax concessions may be a necessity for Australia to continue attracting international productions if it wishes to stay competitive and attractive in the face of many other international locations. This is particularly so when considering the effort some nations in the region are expending to promote their local industries.

But on the other hand, the question needs to be asked: is promoting the use of Australia as a site for location shooting and other production the most sustainable way to grow the industry? How much of the foreign investment that is attracted in this way will be used on “fee-for-service” work that does not provide local industry players with ownership of copyrights? In theory, “service work” provides locals with income and international exposure (provided a local subsidiary is not being used for the work). Yet without owning any of the property’s rights, firms have little in the way of reusable assets.

Singapore’s Media Development Authority (MDA), for example, gives very little consideration for where the production of projects it supports, such as animated TV series, are taking place. The most important factor for the MDA is that Singaporean firms are engaged in the high-end creative work and are retaining at least part of the rights to the content that is being produced.

In contrast, the Australian Federal Government’s 2007-08 budget seems to suggest that Australian policymakers are still too interested in attracting foreign capital and creativity to utilise the services of Australian talent. Given, the production process of an animated TV series is different to a live-action feature. Yet on first glance the tax incentives appear somewhat short-sighted or parochial on the policymakers front by exacerbating an artificial division between supporting “Australian stories” and allowing international films to use local locations and talent.

The differential tax treatment between local and foreign productions if its aim is to encourage foreign investors to put their money into productions that classify as “Australian” by employing a certain number of key cast and crew. Still, the question remains whether productions that the government has classified as “Australian” will be saleable in the international market.

Why is the government keen to promote the industry? And just what is the notion with ‘bringing Hollywood home’ (was Hollywood ever in Australia to begin with)? Are we witnessing a case of government pandering to lobbying from the local film industry? Australian games developers, for example, are eager to gain access to these funds that are only available to film, television, and documentary properties. While the games developers, who predominantly develop games for overseas publishers, would naturally be eager to access such lucrative tax rebates, it begs the question why does the film industry and not other ‘content’ industries receive such government support?

Should support be provided to the local games industry for the creation of ‘original’ IP rather than service work for international publishers?

See also SMH article ‘Filmmakers get…’