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Reviewing the Australian Film Industry CASE PROGRAM 2007-98.1 Reviewing the Australian film industry An indigenous film industry is not about the box office – the French value on culture, diversity, and the value of a mirror on society is a far more relevant model.1 John Maynard, Producer, Romulus My Father Australia is a strange place when it comes to film finance. It’s always been puzzling to me. You speak the same language, you’ve got great production facilities, you’ve got studios down there, you’ve got great locations, and you have some of the biggest stars, but when it comes to actually making movies for the international market, it rarely happens that you have an Australian producer who finances it using Australian money which hasn’t been subsided and makes it as an international film.2 Jared Underwood, Film financier Film investment is probably one of the riskiest investments and even if you go on to Hollywood, less than one in ten films actually go into a profit. Most of the world is independent film making and wherever you go, anywhere in Europe, there's always some sort of subsidy to support an independent film industry.3 Brian Rosen, Chief Executive, Film Finance Corporation After a renaissance in Australian film-making during the 1970s, by 2006 production levels had slumped to their lowest point since the early 1990s. Spending on television drama was in decline and foreign film production had plummeted dramatically from previous years. As private investment was dwindling, financing was increasingly in the hands of the Film This case was written by Marinella Padula, Australia and New Zealand School of Government, for Peter Thompson as a basis for class discussion rather than to illustrate either effective or ineffective handling of a managerial situation. Cases are not necessarily intended as a complete account of the events described. While every reasonable effort has been made to ensure accuracy at the time of publication, subsequent developments may mean that certain details have since changed. This work is licensed under Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Licence, except for logos, trademarks, photographs and other content marked as supplied by third parties. No licence is given in relation to third party material. Version 23-10-2007. Distributed by the Case Program, The Australia and New Zealand School of Government, www.anzsog.edu.au. 1 Dolman, A. ‘Foreign Financing Avenues for Australian Feature Films’ Australian Film Television and Radio School. August 2006 p.7. 2 ibid. p.47. 3 Film industry and investors’ Saturday Extra, ABC Radio National, Broadcast Date: 25 March, 2006. 1 Finance Corporation and similar bodies. Concern within industry and government led the latter to launch a review of film funding support in July 2006. The aim was to examine the efficacy of federal assistance schemes and how they could be best applied to ensure the long- term vigour and viability of the local film industry. Submissions were sought from Australia’s film-making community and the results would be announced as part of the 2007- 2008 budget. Importance of the film industry Storytelling has been a critical mechanism for transmitting and preserving knowledge, traditions and values throughout time and filmmaking has been a significant part of Australia’s cultural life for more than 100 years. The Story of the Kelly Gang (1906) was one of the first feature films ever produced, if not the first, and Australia was a pioneer of the nascent medium. Film explored different facets of Australian life and gave the outside world an insight into what was, for most, a distant and unfamiliar nation. Many renowned directors, cinematographers and actors trained in Australia and/or honed their skills in the local industry before launching international careers. Some would return to shoot features or lend their expertise to emerging film-makers. George Miller and Baz Luhrman were two directors who had parlayed their overseas success into big budget local productions such as Happy Feet and Moulin Rouge. Overall, the industry was responsible for the direct or indirect employment of approximately 50,000 people, from lighting technicians to cinema staff.4 Each film shot in Australia had multiple flow-on effects for local businesses and the economy. One of the most notable Australian examples was the 1986 film, Crocodile Dundee starring laconic comedian Paul Hogan. On its release it became a US box office hit and, together with Hogan’s “Shrimp on the barbie” ad campaign, prompted record numbers of American tourists to holiday “Down Under”.5 More recently in New Zealand, a 2003 Ministry of Tourism survey found that more than 75,000 arrivals cited the Lord of the Rings trilogy as a reason (or the reason) for their trip.6 Furthermore, Australia had become an attractive destination for foreign filmmakers. Despite the distance, government incentives, lower costs and ready pool of talent had lured big budget productions such as Superman Returns, The Matrix and Star Wars: Episode II. Sydney and more recently Melbourne had developed studio facilities to accommodate television and film productions, the latter built in partnership with the Victorian Government. During 2003-2005, almost $500 million7 was spent by foreign productions in Australia, though that figure plummeted dramatically in 2005/06 (Exhibit A). 4 ‘Industry Overview: Employment’ Australian Film Commission www.afc.gov.au/gtp/oesummary.html#Rdy11090 Accessed 2007. 5 ‘New Australia to lure tourists.’ The Bulletin 14 September, 2005. 6 Media Release ‘Growing Obsession with Movie Locations Fuels Tourism Industry’ University of Central Otago, 8 October, 2004. 7 All figures in Australian dollars. During 2002-03 the Australian dollar averaged $US 0.58c. In 2005-2006 it averaged $US 0.74c. 2 Industry overview According to the Australian Bureau of Statistics, by the end of June 2003 there were 2,174 film and video production services businesses in Australia which employed some 16,427 people. 8 Of those businesses, 182 were involved in the production of feature films. Nearly 60 percent of the total workforce was employed on a casual/temporary basis and the majority of workers were male (60 percent). Artists and production related professionals comprised 42.2 percent of the sector while the remainder were generally engaged in technical support (27.5 percent) or managerial/ administrative roles (26.3 percent).9 The vast majority of businesses (84.5 percent) employed fewer than four people but over half of all workers were employed by the 1.6 percent of companies with more than 100 employees.10 However, the number of staff employed by any one company could fluctuate considerably depending on what stage of production its projects were in. During the 2002-03 financial year, film and video production businesses generated $1,596.6 million in income and incurred $1,504.8 million in expenses. Labour costs accounted for just over 30 percent of business expenditure. Overall, their operating profit before tax was $91.7 million, which represented an operating profit margin of 5.9 percent.11 This sector was involved in a wide range of activities, including the production of feature films, television programs, commercials and post-production services. For example, in 2005-2006, an estimated $18.5 million12 was spent on telemovies and $22 million13 on filming mini-series. In fact, feature films accounted for less than 4 percent of industry revenue, whilst productions for television accounted for almost 25 percent.14 Although feature films only represented a small proportion of industry output, they were by far the most expensive product. From July 2000 to June 2006, 50 percent of Australian feature film budgets were an average of $3 million and above.15 However, the average box office takings for Australian films in 2006 were $1.1 million per picture.16 According to Film Finance Corporation estimates, the costs of shooting Australian features had risen substantially in the past decade, particularly location, equipment, storage and wage costs. Geographically, the film and video production sector was concentrated in New South Wales which had over 50 percent of the market share. Victoria and Queensland accounted for most of the remainder.17 The producer and production While their involvement varies, producers often lead a film from the earliest stages of its inception, right through to its theatrical release. It is an extremely speculative profession that 8 Australian Bureau of Statistics ‘Television, film and video production’ Survey 8679 (2002-03) p.4. 9 ibid. p.15. 10 ibid. 11 ibid.p.4. 12 ‘Number and total production budgets for telemovies shot 1990/91–2005/06’ Australian Film Commission http://www.afc.gov.au/gtp/mptelemoviesummary.html Accessed June 2007. 13 ‘Number, total production budgets and hours of mini-series shot 1990/91–2005/06’ Australian Film Commission http://www.afc.gov.au/gtp/mpminiseriessummary.html Accessed June 2007. 14 ibid, p.18. 15 ‘Feature films shot July 2000 to June 2006 (2006 dollars)’ Australian Film Commission, http://www.afc.gov.au/gtp/mpfeaturesbudget.html Accessed June 2007. 16 ‘2006 Box Office Backgrounder’ Australian Film Commission, January 2007 p.3. 17 ibid. p.21. 3 demands high levels of patience, troubleshooting ability and entrepreneurial flair. Some producers were directors who started their own production companies and moved between roles, others began their careers in television production before venturing into film. From 1991-2001, the proportion of people in film and video production with tertiary qualifications climbed from 47 percent to 58 percent.18 While the technical aspects of production were well covered, few arts education institutions in Australia offered in-depth training addressing the legal and financial dimensions. Production stages Most feature film productions pass through the following phases, although producers often work on multiple stages and projects simultaneously.
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