Steven Ciobo (Moncrieff, Liberal Party, Shadow Minister for Small Business, Independent Contractors, Tourism and the Arts) Share this | Link to this | Hansard source

I rise tonight to present the Tax Laws Amendment (Improving the Producer Offset) Bill 2009. In September 2007 the then coalition government established the Australian Screen Production Incentive, providing more than $280 million over four years and generous incentives for Australian film and television productions and for offshore productions to locate to Australia. The new incentives included the producer offset, which provides a 40 per cent rebate to producers of Australian films, and a 20 per cent rebate for the production of other media. The intention of the producer offset was to provide the necessary impetus to grow the Australian production industry by making it easier for Australian producers to attract private investment, increase equity in their productions and develop stable production companies. As Senator Brandis, the then Minister for the Arts and Sport, said at the time:

The introduction of the Producer Offset reflects the Government’s view that a sustainable and independent screen production sector is crucial in building a stronger Australian film and television production industry.

I am introducing this bill today to reinforce this view and the coalition’s commitment to the view. While the producer offset was welcomed by the Australian screen industry, it is clear it is not operating to its optimal and planned capacity.

In a comprehensive paper that was submitted in July 2008 the Screen Producers Association of Australia, otherwise known as SPAA, raised concerns with the current government regarding the timing of the acquittal of the producer offset funds back to the producer after the issuance of the final certification. Currently, the producer offset funds are remitted only once a tax return is lodged for the financial year in which any project is completed or through some other sort of special vehicle. Some of the practical problems and unintended consequences of this provision are the delays that can occur between completion of a production and the receipt of the offset funds which leads to cash flow loan terms being longer than would ordinarily be necessary had the reimbursement occurred at the time of lodgement. The Media Entertainment and Arts Alliance said:

One serious problem has been identified concerning the operation of the producer offset. It serves to erode the benefit of the offset, trigger unnecessary expenditure on financing costs, increase production budgets and will cause cyclical employment and utilisation of film industry facilities, equipment and services.

In response to these concerns the Australian Taxation Office has advised the Screen Producers Association of Australia that, whilst recognising the industry’s concerns are ‘reasonable on commercial grounds’, it is not ‘willing to exercise the relevant discretion at this point in time’. In reasoning this decision the tax office said:

The timing problem identified by industry is inherent in the design of Division 376 and government could have chosen to deal with the timing issue differently if so desired.

It is time the Labor government did deal with the timing issue differently. The opposition, and I as shadow arts minister, have been advised that the commissioner has ample discretion in section 168 of the Income Tax Assessment Act 1936 to make an early special assessment to assist Australia’s film producers and runaway productions. However, I understand the commissioner and the tax office are, in the absence of any specific instructions, expected to maximise revenue collected for a given budget.

The government has allocated $100 million for the refundable film and television offsets in the 2009-10 budget. The opposition is not proposing to increase this expenditure. Rather, tonight I am proposing for it to be used more efficiently and effectively. That is why this bill requires the commissioner to consider the effectiveness of the producer offset in making a decision. This will implore the tax office to exercise the relevant discretion where a company applies to the commissioner for a special assessment under section 186 of the Income Tax Assessment Act 1936.

There are nearly 2,500 businesses in the $2 billion film and video production industry. The coalition appreciates the contribution these businesses make to the Australian economy and the nearly 14,000 Australians they employ. That is the reason why we and I, as shadow arts minister, are very committed to seeing the producer offset meet its full potential. I commend this bill to the House and I place on the record my urgings to the Minister for the Environment, Heritage and the Arts, the member for Kingsford Smith, to get on board, to support this private member’s bill and to ensure that the Australian film and television industry is best able to move forward with a more effective producer offset.

Bill read a first time.

Janelle Saffin (Page, Australian Labor Party) Share this | Link to this | Hansard source

In accordance with standing order 41, the second reading will be made an order of the day for the next sitting.