Oct. 28 (Bloomberg) -- Australia’s film industry needs tax rebates to remain competitive as the nation’s remoteness and strong currency discourage big budget foreign productions, said Baz Luhrmann, director of “The Great Gatsby.”
“You’re dealing with the fact we’re on the edge of the world,” Luhrmann, 51, said in an Oct. 24 interview in Sydney. With government support “you’re making it attractive, you’re giving a bit of an equal playing field,” he said.
Six foreign productions were shot in Australia in the year to June 2013, down from nine in 2005, according to Screen Australia, as a stronger Aussie dollar deterred filmmakers. “The Matrix” and “Mission: Impossible II” were filmed in the nation between 1998 and 1999, when the local dollar was trading below 70 U.S. cents, versus an average of 98 cents this year.
The government announced a payment of A$12.8 million ($12.3 million) last year to lure “The Wolverine,” the Marvel superhero movie starring Hugh Jackman, in an effort to boost foreign filmmaking at a time the local industry struggles. Home-grown films haven’t gained more than a 10 percent share of Australian box office receipts since 1988, when “Crocodile Dundee II” boosted receipts, and were just 4.3 percent last year, Screen Australia figures show.
“I think a high Australian dollar’s always a problem but the biggest problem is always distance,” said Luhrmann, an Australian known for lavish productions including “Romeo + Juliet,” “Moulin Rouge!” and the 2008 movie “Australia” starring Jackman and Nicole Kidman.
The nation produced the world’s first full-length feature film, “The Story of the Kelly Gang” in 1906, according to Guinness World Records. Australia’s movie industry flourished in its early years, with actor Errol Flynn starring in Charles Chauvel’s “In the Wake of the Bounty” before becoming a Hollywood star. More recent international successes included “Picnic at Hanging Rock” in 1975, “Mad Max” in 1979 and “Crocodile Dundee” in 1986.
In 1994, “The Adventures of Priscilla, Queen of the Desert,” and “Muriel’s Wedding” boosted local receipts to 9.8 percent of the nation’s box office total. Since then, local productions failed to garner widespread appeal, with the local take averaging just 3.8 percent over the 10 years through 2012.
Andy and Lana Wachowski, makers of the “Matrix” trilogy, opted to shoot their latest movie “Jupiter Ascending” in Britain instead of Australia because of local currency pressures, the Sydney Morning Herald newspaper reported in November 2012.
Still, Luhrmann convinced Warner Bros. to shoot “The Great Gatsby” in Sydney instead of New York. Production would inject more than A$120 million into the local economy, the New South Wales state government said when the decision was announced in 2011.
“We were thinking about New York and then the funding was too difficult,” Luhrmann said. “We wanted to work with our collaborators and I said, ‘Look, I really believe we can make this in Australia.’”
“The Great Gatsby,” starring Leonardo DiCaprio as the enigmatic, love-struck millionaire, was made with the help of a tax rebate from the federal government known as the producer offset, worth 40 percent of qualifying production expenditure.
“The fundamental creative gesture has to be Australian” in order to qualify for the offset, Luhrmann said. “Doesn’t mean it has to be set in Australia, the Great Gatsby isn’t that. But I had the idea, I got the rights, all the fundamental creatives are Australian.”
Other rebates include a 16.5 percent location offset for large-budget film and television productions shot in Australia and a 30 percent rebate for post, digital and visual effects production work in the nation.
Film industry offsets amounted to A$204 million in the year ended June 2012, compared to A$29 million in the 2007 financial year, according to estimates from the Productivity Commission, a government advisory body.
“The Wolverine” created more than 1,750 jobs and generated A$80 million of investment, according to the government. The A$12.8 million one-off grant was equivalent to increasing the location offset to 30 percent, it said.
“Australia is competitive on crews, locations and studios,” Debra Richards, chief executive officer of Ausfilm, which helps market Australia as a movie-making destination, said in an e-mailed response to questions. “What will attract more large budget production is the certainty of an effective 30 percent tax offset.”
The Australian film and television industry contributed about A$6 billion to the economy, according to a 2011 report by Deloitte Access Economics. Film and video production and post-production businesses employed 15,760 people at the end of June 2012, the statistics bureau said in a June 18 report.
Australia was ranked 26th in the world in terms of the number of feature films it produced in 2010, compared to 1,274 in No.1 ranked India and 754 in the U.S., which came in second, according to Screen Australia, a government agency supporting the industry.
Luhrmann, who was in Australia to help young filmmakers create a short film in partnership with Samsung Electronics Co., said that tax incentives to make films are increasingly being offered in other countries.
“Small countries off the coast of America are doing massive rebates to attract filmmaking,” Luhrmann said. “The rest of the world has copied us somewhat. Rebates around the world are through the roof.”
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