Terms of Trade
Comments received Tuesday 16 December
From Morris Averill
I comment on paragraph 3.17 of the Draft Terms of Trade.
An absolute refusal to provide cash flow facilities in respect of the Producer Offset may cause productions to go into a financing gridlock in the current credit crisis in the world wide banking industry.
Banks that were involved in cash flowing film and television production appear to have stopped offering cash flow facilities. One of the main UK banks that that was involved in providing production cash flow facilities appears to be particularly exposed as the air started to come out of the global lending bubble, with slate.com nominating the former CEO as the world’s worst banker. I suspect that bank is unlikely to return to cash flowing film and television production. Other banks will be slow in returning as each bank rebuilds its capital base and may view involvement in the film and television industry as not being core business.
I suggest that Screen Australia should monitor the effect of the current credit crisis on film and television production financing and could consider the circumstances in which loans and other facilities could be provided to complete financing – if producers cannot access cash flow facilities.
Section 6 (2) (a) of the Screen Australia Act 2008 allows Screen Australia to provide financial assistance in the form of loans and Section 6 (2) (b) allows Screen Australia to provide guarantees.
I suggest that paragraph 3.17 of the draft Terms of Trade be reconsidered. Screen Australia can adopt terms of trade that give it flexibility in managing any impact on the Australian film and television industry caused by the current credit crisis. If producers are unable to source cash flow facilities in respect of the Producer Offset, then Screen Australia could either provide loans to meet cash flow requirements in respect of the Producer Offset or provide a form of guarantee so that Australian and international banks are encouraged to provide cash flow facilities for Australian film and television productions.
Providing loan facilities will of course impact on the level of funds Screen Australia has available for funding programs.
A guarantee that banks will be repaid cash flow facilities they provide in respect of the Producer Offset is a policy that is intended to encourage banks to make such facilities available. The risk that Screen Australia would be called upon to pay out on a guarantee would be manageable as Screen Australia has a complete understanding of how the Producer Offset operates and has the benefit of completion guarantees and production audits to ensure that production is completed such that the Producer Offset is paid by the ATO.
No one knows how long the current credit crisis in the world wide banking industry will last. As the Screen Australia Act 2008 gives the powers to provide either loan or guarantee facilities, I suggest that paragraph 3.17 of the draft Terms of Trade be reconsidered so that Screen Australia, like the Federal Government, has the flexibility to address the impact of the credit crisis on film and television financing.
Co-executive producer “Gumnutz” (2007)