Sources of finance for Australian and co-production features

Since 1995/96, government sources have provided around 25–40 per cent of the funding for the combined Australian and co-production feature slate (see Investor contribution). Until the end of 2007/08, most of this finance came from the Film Finance Corporation Australia (FFC), which has invested in both Australian and official co-production features. In July 2008, the FFC became part of Screen Australia, which is now the primary source of direct government financing.

Funding to federal government film agencies for investment in production was boosted in 2002/03 (providing additional funds over five years) and 2004/05 (over four years). (See Government funding: Federal government initiatives since 2001.)

The peak in contributions from private sources in 2001/02 and 2002/03 is mainly due to increased private investment under the pilot Film Licensed Investment Company (FLIC) scheme. All capital raised under this scheme had to be invested by 30 June 2002 and the last feature was made with FLIC investment in 2002/03. (See Production incentives: Overview.) In 2004/05, contributions returned to a similar level to 2002/03, largely due to the Australian film Jindabyne, which was majority funded by private investors. There was also a peak in 2007/08, due to increased contributions from 10BA investors. Division 10BA of the Income Tax Assessment Act was closed to new applicants in July 2007 with the introduction of the Producer Offset, although the concessional status for investment in productions holding a valid 10BA certificate was still available until June 2009.

Distribution and production companies are the main sources of finance from the Australian film/TV industry, although broadcasters and subscription TV channels are also included. From 2007/08, producers have also added finance to this category via the Producer Offset, cashflowed in various ways.

The peaks in foreign investment over the past nine years have been mainly due to a small number of individual high-budget films financed principally by overseas sources – the
co-productions Charlotte Gray and Crocodile Dundee in LA in 2000/01, the Australian features Crocodile Hunter: Collision Course and Swimming Upstream in 2001/02, Happy Feet in 2003/04, Australia in 2006/07 and Happy Feet 2 and Guardians of Ga’Hoole in 2008/09. These latter two titles also had a significant impact on Australian industry investment for that year.
Co-productions by definition require a foreign production partner, and significant foreign investment is often attached.

Australian features

Most Australian features in the 1970s were funded through government agencies such as the Australian Film Commission, the NSW Film Corporation, the South Australian Film Corporation and the Victorian Film Corporation, with a small number fully financed by distributors.

In the 1980s, almost all features were funded using private and largely ‘non-industry’ finance raised under the 10BA tax incentive system, with ‘top-up’ finance provided by government film agencies.

Direct funding from government agencies, principally the Film Finance Corporation Australia, again became the major source of finance in the 1990s, combined with film industry funding (mainly distributors) from Australia and overseas; only a small number of features have been financed solely via 10BA since 1988, when the tax deduction was reduced to 100 per cent. The introduction of the Official Co-production Program in 1986 helped to establish foreign investment as another major source of finance throughout the 1990s and 2000s.

Some features – where the filmmaker is internationally known and makes films both in Australia and overseas – have been principally or fully financed by overseas sources. Examples include George Miller’s Happy Feet and Happy Feet 2 (financed by Warner Bros) and Babe: Pig in the City (Universal), Swimming Upstream from producer Andrew Mason (Crusader Entertainment), Baz Luhrmann’s Moulin Rouge and Australia (Fox), Shirley Barrett’s Walk the Talk (Dreamworks), and Jane Campion’s Holy Smoke (Miramax), as well as Rolf de Heer’s Dance Me to My Song (funded from Italy) and Paul Cox’s Dutch-financed Innocence. 2001/02’s Crocodile Hunter: Collision Course (MGM), featuring Steve Irwin, is an example of overseas financing stemming from the US profile of its star.