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Stop Blaming the Offset!

As if we need to be bashing anyone up about the producer offset! The problem is the global financial crisis: you can't pre-sell any films, you can't even sell finished films, and sales agents are going under. And then there's the Australian dollar at 90 cents. There is no demand and the system is not working anywhere. With no presales there is no gap financing and no lenders. Why blame the PO? It hasn't been given a fair chance. Unbeknown to the Government it was introduced at the worst possible time and it is working fine given the difficulties. 10BA wouldn't be working now either. I'm not saying the PO is perfect. It has flaws but it is a very generous system. We all have to just get on with it. And it is not so different from many other places in the world. Does that mean we've all got it wrong?

Some see it as a problem that few films are being made without Screen Australia's involvement but few were made outside the agency with 1OBA. Yes, the offset was introduced with the idea of building industry potential but again, the worldwide financial downturn is not the offset's fault. If we had gap finance and films were selling, the offset would be working. It is extremely difficult to
finance films anywhere at the moment with the exception of India.

If you want to do a film without Screen Australia you have to work within that system. You would have some chance of getting presales with a film titled Lesbian dwarves attack Brian Rosen (Editor's note: Menzies is half joking and making reference
to a quote once made by Rosen in the Australian Financial Review about the narrow nature of the films Australian producers were interested in.) More seriously, if you wanted to make a full-on action film with a couple of stars based on a comic book you could
get financed if one of our directors were to came back from Hollywood. Genre films are fundable but we have not been producing them.

Everyone knows how to get funding from Screen Australia, which inevitably is going to support films that are more culturally than commercially orientated, but not how to use the new system.

I don't see the $1 million threshold as a real impediment either because if you are looking to raise $1 million from private investors it is only going to be from family or friends. It is true that 10BA made it a bit easier because your friends or family could write off the money in one go, but not that much easier. Also, it is rare that a low-budget "theatrical" feature for less than $1 million measures up to the competition. It is just not what people go to the cinema for any more.

What else? Accountants are far more important. Not that they do not deserve to be. There are lots of companies in the post sector entering the arena and that is a positive. Accommodation at festivals is cheaper because companies are no longer taking 50 people. The bottleneck is in distribution because they have enough films at the moment. With Screen Australia doing less films and investing less I am certainly examining co-productions - I have had a bit of practice - a gap of 20% in the finance plan may
be able to be filled if it qualifies as an Australian co-production.

Yes, we are in hard times but it is interesting.

Bryce Menzies - Partner, Marshalls & Dent Lawyers - November 2009

First published in ‘Above the Line’, Issue 2 November 2009