Matt Keogh (Burt, Australian Labor Party, Shadow Minister for Defence Industry) Share this | Hansard source

[by video link] This piece of legislation with its very clear name hides the fact that it deals with many different pieces of Treasury law, but there is one area that I want to come to directly in my contribution this afternoon. It's that the federal government doesn't believe in the arts or believe that jobs in the screen industry are real jobs. Typical of this government's approach to policy in this space in general, they've been dragged kicking and screaming towards doing something positive for the television industry and in the process have dudded the rest of the industry. Labor are proud that we have forced the government to amend this bill to remove the reduction in the production offset for the Australian feature film sector, which would have seriously compromised the Australian domestic feature film industry.

There are two positive changes contained in this bill: the producer offset for television productions, which will be increased to 30 per cent; and the removal of the 65-hour cap on the producer offset for television, which will mean the offset can be claimed for an entire television series instead of being limited to just the first few episodes. It is worth noting, though, that these positive measures weren't even the Morrison government's intention and only came about from sustained pressure from Labor and the government's own coalition partners, the Nationals.

The same can't be said for myriad other damaging measures that are featured in this bill. The increase in qualifying expenditure threshold for the producer offset, contained in this bill, is bad news for smaller and lower-budget films. These are small Australian businesses, employing Australians, telling Australian stories, that are going to be negatively affected. Before COVID, many international post-production projects never came to Australia. But, given our world's increasing use of remote workforces, Aussie owned companies have been able to compete and win millions in post-production and visual effects work that can be done remotely, helped significantly by the current post, digital and visual—PDV—effects 30 per cent tax rebate, a rebate that this legislation seeks to change.

This legislation proposes to raise the PDV offset threshold from $500,000 to $1 million. With most post-production and visual effects budgets below $1 million, increasing the threshold offset to that amount risks forfeiting all this work, sending it offshore to cheaper providers. The vast majority of these projects, picked up and undertaken by small and medium-sized businesses here in Australia, are in the hundreds of thousands, not millions. So increasing the tax rebate threshold will leave Australian owned firms unable to compete with their overseas counterparts.

This might not be a sector that we hear much about, but it is a sector that Australia excels at. We have some 400 people in the sector, contributing to massive Hollywood feature films. It's a very impressive export for our small businesses. Here in Western Australia we have an impressive list of post-production companies, including Boogie Monster, in Perth, who are known for their unique ads. Another local business, Double Barrel, started out their company in the spare bedroom of a friend's place in Canning Vale in my electorate of Burt, and they are going from strength to strength, having contributed to Amazon, Warner Bros, Paramount and Disney feature films. Sandbox, in Perth, have delivered myriad post-production services to a huge number of Australian TV shows. KOJO, also based in Perth and working across the country, have contributed to such films as Top End Wedding, The Lucky One, Wolf Creek, No Reservations and Storm Boy.

While these small Perth companies are frenemies, vying for the same work, they're banding together to support their sector, because it's not just one-off contracts that will be hit by this threshold change. If a company like Warner Bros, for example, wanted to get some post-production work done in Australia, that work wouldn't be going to one small company in Australia; it would be divided into smaller contracts, in audiovisual, in editing, in graphics. All of that can amount to contracts totalling over the $500,000 to make Warner Bros eligible for the offset. These companies were all working in the same $500,000 threshold for business planning, expansion, recruitment, training and the like. This change will change the goalposts for them, and businesses looking to use them, overnight. The likelihood of combined expenditure totalling over $1 million here in Australia is negligible.

Aussies have a great reputation for quality work and for putting more than 110 per cent in. Our industry is climbing. So what have we got to lose? Well, Australia will miss out on millions of dollars worth of post-production and visual effects projects every year with growing export revenues, and companies will be cut off overnight. We will lose over 400 full-time and part-time jobs in Australia. We will lose the opportunity to use this investment to cross-subsidise Australian productions and to better tell more Australian stories. We won't be able to grow and expand this important industry that showcases and grows Australian talent. This is a growing industry in Australia that will be destroyed overnight should this legislation changing the threshold go through in full. And it won't just be those involved in postproduction; it will impact across the sector—in front of screen, behind screen, organising, all of the different work that comes into this sector.

Another important and notable part of the bill, though, is the removal of the Gallipoli clause. It's a clause that got its name from the renowned film Gallipoli. Parts of that film, understandably, had to be filmed overseas. This clause exists so that Aussie movies that have to film parts overseas can do so and claim some of that expenditure against the offset. This is of course most important in telling stories of our military history. The government has not provided any clear rationale for these damaging changes that will decimate our film and production industry virtually overnight. Its apparently only rationale is cost-saving, at a time when the screen sector—like most industries in Australia—is still recovering, if not indeed suffering, from the impacts of the COVID-19 pandemic. If the government had truly thought about it, surely they wouldn't be introducing legislation that will destroy Aussie jobs in the blink of an eye, let alone be taking away the ability for us to grow our cultural wealth and share our Australian stories locally and to the world.

I often talk about the synergies in the defence industry and small-business portfolios, my two areas of shadow ministerial responsibility. In this instance, the parallels made me chuckle nervously. You see, in consulting with screen industry players, they told me that most other countries have generous offsets and incentives to bring film production work to their nations. Australia's current one is okay but it could be better. But it's not shocking. The eradication of the post, digital and visual effects tax rebate, however, will put Aussie companies completely on the back foot, competing with overseas companies who are backed by their respective governments. Much as with the Australian defence industry, the Australian government is failing to support our local film and TV industry, leaving them to go it alone while their overseas competitors are supported by their governments. The Aussie film, post-production and visual effects industry punches way above its weight, and we shouldn't be undermining it. We have a great international reputation, and our businesses are growing, but they will be wiped out overnight if this legislation comes into effect. We will be leaving them to fight with one arm tied behind their back against others who are getting support in their home nations.

But, as I said, the government don't care about the arts. They don't believe that there are real jobs in the arts. So we will make sure that the government do consult on this issue, they do hear from the sector and they do evaluate the real-world consequences, be they intended or not. Labor will refer this bill to a Senate committee inquiry to make sure that the industry's voice is heard in respect of these changes. We will also seek to make changes to this legislation to ensure parts of this bill that will have a negative effect on the Aussie screen industry are removed, once again demonstrating that it's not the Liberals but Labor that is on the side of small business.

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