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Part 1: Temporary Interruption Fund (TIF)

Screen Australia’s Head of Business Affairs and Offset Tim Phillips demystifies the new fund.

How did the TIF come about?

It was announced in June by the Prime Minister and Minister for Communications and it ultimately came out of discussions that the Minister had been having directly with segments of the production industry. Producers had articulated a problem that had arisen in the post-COVID-19 world, which is that film production insurers had started excluding COVID-related risks from their insurance policies.

Insurance policies on feature films and television series are very important because they're sizeable enterprises consisting of many millions of dollars, and the policies protect the financiers in case something goes wrong. Financiers of film and television projects were very nervous to commit to projects when this insurance gap existed.

This wasn’t just an Australian problem. This was an international problem. Producers all around the world have been experiencing the same thing and voicing their concerns. A number of other territories started to address the situation and the great thing is that the Australian government listened, acknowledged that there was an issue and has reacted by implementing the TIF fund, which aims to fill the gap.

What does the TIF fund cover?

It's a very specific risk that it covers. It provides financial assistance to a production in a specific set of circumstances: when a key named person (you can have up to 10) on the production contracts COVID-19 and the production suffers additional expenditure because it's either been suspended, delayed or in the very worst case, abandoned; and the financiers need to be repaid some of their investment.

So it’s providing financial assistance should COVID-19 impact a production negatively?

No, it’s even more specific than that. The fund doesn't cover a general interruption to a production caused by COVID-19. It covers the scenario where one of the specifically-named key people gets sick. It's not a general COVID-19 business interruption fund. 

Importantly it does cover the most extreme, potentially disastrous scenario where the director or lead actor or actress gets sick from COVID-19 and the series or film gets abandoned. This is the most extreme outcome and if the series/film gets abandoned due to this event, TIF will pay the financiers out the expenditure to date to 60% of the production budget or $4 million.

What do you mean by ‘key people’?

The producer nominates ten people for the fund to cover, which they pick from the key cast, the director, the producer and heads of department. We suspect that most of the time the nominated people will be the director and key cast.

The reason for that is when you are shooting a film or a series, principal photography is the intensely expensive period of the production. You've got a lot of people engaged and the production's tightly scheduled to try and minimise cost. It makes it really unforgiving if something goes wrong. If one of your lead actors is sick for weeks, you're quickly going to suffer some real financial problems. So that's the purpose of TIF - to give producers financial support in case that scenario happens where there's interruption to the shoot caused by an illness to a key person.

Another prerequisite of the cover is that those 10 named key people need to have a COVID-19 test before the period of coverage. At the moment we are asking they take the test a reasonable time prior to the commencement of working on the project. It's for the producer to organise those tests.

What part of the production process does the TIF cover?

It covers the last two weeks of preproduction and it covers principal photography. The reason is that those are the most unforgiving periods of production. Those last two weeks of preproduction you're really scaling up to shoot. You're doing rehearsals. You're doing all your tests. And then once you're in principal photography, you're in that highly scheduled, very expensive period, so that's when the coverage is at its most beneficial. Obviously, problems can occur in post-production and still have a financial impact on a film or a series. But it's just a much more forgiving period. Delays can be covered potentially by other means. Also by limiting it to the last two weeks of preproduction and principal photography period, it means we can stop coverage of one project and move it to another project, looking to maximise the number of projects that can be covered.

When should people be getting their applications in?

The fund is a capped fund, where we can't enter contracts for potential coverage that would exceed the $50 million cap. Therefore, while I encourage people to put in an application for the fund early if they're seeking coverage, if your production is actually a fair way in the future, it's unlikely that we're going to agree coverage for it now. What will probably happen is you will be put on a waitlist, where we will be tracking the amount of coverage we have at that time. And as one production finishes, we'll be able to contract new productions. 

Tim Phillips Tim Phillips
The benefit of putting your application in early is that then we're aware of the project and we're aware you're seeking the support. Where it gets tricky is being as clear about dates of coverage as possible because we can't provide more than $50 million of coverage at any one time. So if your production dates are fluid and are subject to move, it does make it harder for us. Even if we provisionally approve your project and then the dates move, that may put the approval at risk. So I'm encouraging people to come in as early as possible, but you do need some confidence about the potential dates, because significant movement could really cause a problem for any approval.

What happens to the fund if some projects have to be paid out?

As I said, we can't offer potential coverage for more than $50 million at any one time.  Further to that if some productions encounter problems and receive a financial benefit from the fund, it has the effect of reducing the cap. So if $5 million is paid out, then we'll be looking to not enter into more than $45 million of contracts after that day. So it's a juggle.

You mentioned provisional approval. What’s the process?

It will be a very short timeframe. We'll send you an email if we've provisionally approved the cover. All that means is that we're ready to enter into a long-form agreement with you. You don't actually have any coverage until you enter that long-form agreement with Screen Australia, but we'd be expecting the timeframe between that notification and entering the agreement to be very short (also note there is a fee in order to start TIF coverage that is covered in later questions).

What is the process if an event happened?

It's hopefully going to be relatively clear if an event has occurred, which is going to trigger the financial assistance. And that's because it's going to be pretty clear whether or not a named person has COVID-19 and whether or not the production has suffered additional expenditure as a result of it. But if that event happens - and let's hope it doesn't - then the producer applies to Screen Australia with details of the event and Screen Australia will engage a third party experienced at assessing these types of claims who will then give a recommendation. From there, Screen Australia will either decide to accept or seek further assessment.

Is this additional funding that's been given to Screen Australia?

No, we don't actually hold any additional money. If we do need to make a payment of financial assistance to a production through the TIF, then we will draw down that money from the Department of Communications and pass that money onto the production.

How long is the TIF available for?

It runs for this financial year. So if you have started production in this financial year – even if your production runs into the next financial year - then you'll be eligible for cover.

So if one of these productions started last financial year and was stalled because of COVID-19, they’re not eligible?

It's only for new productions. The goal of the fund is to get new productions up and running. So if you've already started shooting, you're not eligible for the fund.

Is the agreement open for negotiation?

No - the agreement has been drafted by the Australian Government Solicitor and it's not an agreement that's open to negotiation. It is the terms of the fund and we also don't add other parties to that agreement. 

Do you need to be a certain format or at a certain budget level to apply?

It's platform neutral. But if you're a drama series or a documentary series, you do need to provide a provisional certificate for the Producer Offset for eligibility. That does mean there is some eligibility criteria around the size of the project because there are minimum expenditure levels for the Producer Offset. Provided you meet those levels then technically you're on a scale that is big enough to get the TIF coverage.

What is the fee associated with the TIF?

The fee is not to apply for the fund. It's a fee that you pay for the coverage, and it's 1% of the total amount the project is being covered for. The fee doesn’t get repaid if you don't make a claim. It also doesn’t go toward building on the size of the fund. The fee will cover the hard costs of administering the fund, including setting it up and assessing claims for financial assistance through third parties.

Is the fee QAPEable?

Wearing my other hat from Offset, we’ve discussed this as a team and think it is reasonable to consider it as a QAPEable expense. But as with all potentially QAPEable expenses we won’t be able to say definitively until it’s been assessed.

When do you pay the fee?

Basically you don't have the cover until you pay the fee. So you can choose when you want to pay it. But for example, if you're only paying it when principle photography starts, you won’t be covered for those last two weeks of pre-production.

Can you apply to the COVID-19 Budget Support Fund to pay the fee?

No, requests to cover TIF fee will not be supported through the COVID-19 Budget Support Fund (read more in Part 2).

Any final pieces of advice?

We think the fund is going to be popular and there is a good chance that we won't be able to cover all projects looking for support therefore, producers should always be thinking of a plan B.