Michael Ronaldson (Victoria, Liberal Party) Share this | Hansard source

I am pleased, as Chair of the Senate Standing Committee on Economics, to follow my friend and committee colleague Senator Murray in talking to the Tax Laws Amendment (2007 Measures No. 4) Bill 2007 and related bills. I would like to follow on from some of his comments in relation to schedule 10 of the Tax Laws Amendment (2007 Measures No. 5) Bill 2007, which I will refer to as TLAB5.

Schedule 10, which deals with film production offsets, follows on from a 2007 budget announcement by this government which, quite rightly, received enormous praise from those in the industry. I would like to briefly quote some of the commentary following the budget. I quote from the Australian on 10 May:

Talk to people in the film industry and the Australian Screen Production Incentives, announced as part of a $282.9 million film package, seem poised to pave a yellow brick road back to Oz, luring home creative talent that has drifted off-shore.

“I would like to think that within two or three years the amount of production will lead to an increase of 25 per cent [in] television drama feature films,” says Brian Rosen, chief executive of the Film Finance Corporation.

“The industry got everything it wanted: it’s the biggest change since 10BA was introduced by the Fraser government 25 years ago, which created the strong talent base. Now it’s about creating the businesses to drive the industry. Successful Australian international directors will come back and make more films here.”

In the Sydney Morning Herald on 9 May this year, in the arts section, John Garnaut wrote:

The Arts Minister, George Brandis, gave the film industry almost everything it wanted last night, with a $280 million funding injection over four years.

He continued:

The changes are considered the most important for the industry in more than a decade.

Minister Brandis, I do congratulate you on this extraordinary initiative which will make a huge difference to the arts in this country. In the Sydney Morning Herald on 10 May, in the arts and entertainment section, in an article headed ‘Luhrmann hails budget boost for film “stunning”‘, Gary Maddox wrote:

From the set of his epic film Australia, director Baz Luhrmann described the boost for the film industry in the budget as extraordinary.

Driving back from meetings with film-makers, the Village Roadshow managing director Graham Burke said it was “much bigger” than the Division 10BA tax incentives that fuelled an Australian film-making boom in the 1980s.

All round the industry there was marvelling at the scale of the Federal Government’s support—

that is, at the meeting he was at. The article quotes Mr Luhrmann as saying:

“It’s an extraordinary result really and probably a very historical moment,” he said. “The one big idea that they responded to and have completely embraced is that around the globe, we’re in an extraordinary and unique situation when it comes to the cinematic arts ...”

The article continues:

Graham Burke, who is involved in production both through Village Roadshow and the Warner-Roadshow joint venture, said it was “a wonderful moment” in the history of the Australian film industry”.

“Australia has a natural skill in this area and for the Government to be encouraging that in a way that is commercial, because it will cause private investment to sit beside the government money, is just stunning.”

There were many more quotes following on from that marvellous initiative.

My colleagues and I on the committee met in relation to all these matters. We took a lot of evidence. I would like to thank colleagues from the government and from the Labor Party, and Senator Murray, for their assistance. We heard some initial issues in relation to the Tax Laws Amendment (2007 Measures No. 5) Bill 2007. Basically they revolved around the following matters. I quote from paragraph 11.9 of the report:

• the potential effect of the bill on the allocation of resources between in-house and independent producers in the television production sector;
• the accessibility of the production offset to animators;
• the depreciation of low value capital assets used in film production …

In relation to the first of those, the allocation of resources between in-house and independent producers, there were two quite separate schools of thought. The Screen Producers Association of Australia raised concerns ‘over the possibility of Australian commercial television networks exploiting the 20 per cent producer rebate at the expense of the independent television production sector’. Free TV—and I refer now to 11.16 in the report—representing the free-to-air commercial networks, rejected the notion that the legislation should discriminate against in-house producers by limiting their access to the rebate. Free TV also repudiated the claim that commercial networks’ access to the rebate would shift production from the independent sector in-house. It argued that generating quality television content will always take precedence over maximising available tax rebates.

The committee listened very carefully to the Screen Producers Association of Australia, and particularly to the presentation from Mr Geoffrey Brown. Recommendation 3 of the report reads:

The committee recommends that the Govern-ment review the implementation of the producer offset scheme in twelve months to ensure it is not being misused to mitigate the intention of facili-tating a sustainable Australian film production sector, including a vibrant independent sector.

I am very pleased that the government has actually gone further than that. The amendment that will be moved will make it quite clear that the minister must indeed, before the end of 12 months after the commencement of the division, initiate a review of the effect of the division in relation to levels of production by the Australian independent production sector compared to levels of production by Australian television broadcasters. What this means is that in 12 months time we will know exactly what the situation is in relation to any potential swing between outsourced, independent production and in-house production.

We have evidence from Free TV and their representatives that there will not be such a move back to in-house production. There are the legitimate concerns of the independent sector that this will occur. It was the committee’s view that it was a matter that was better dealt with in 12 months time by way of review than, if you like, by the committee picking winners on information that quite frankly we could not judge until it had been put—