Wednesday, May 9, 2007
R.I.P 10BA and 10B
The 2007-08 Federal Budget has delivered many things for many people. Tax cuts, additional superannuation contributions, an increase in child care assistance packages, one-off payments of this and that to the elderly ... and on it went. About half way through Peter Costello's speech, I had the distinct impression that I was being force-fed Prosperity. I was having it shoved down my throat ... and I found myself gagging on the veritable length and breadth of the package. Of bribes. Of course, whether my fellow Australians are as gullible as all that remains to be seen. I didn't, however, feel entirely compelled to swallow Mr Costello's load. What was missing for me was a reference to 'Culture' (other than the culture of war and defence) or 'The Arts' (other than the art of shovelling dollars down our throats). But the devil, as they say, is in the detail ... and it was a disastrous night for Australian Arts and Culture (unless you happen to think that the Australian Ballet School's Southbank HQ deserves renovation).
Hardly! I used to work for The Australian Ballet, and every time I have been to see them in action since, especially at the Sydney Opera House during the last seven years, I've had to leave. Had too ... as in, no other choice but to. As a company, they are at the lowest ebb of their creative ebb and flow. In Mr Costello's budget, however: "The Government will provide $4.6 million in 2007-08 to the Australian Ballet School, including $2.9 million to address occupational health and safety issues in its current facility, and $1.7 million to undertake a detailed business plan and functional design for possible construction of expanded facilities." Yes, you read that correctly: " ... $1.7 million ... for [a] possible construction of expanded facilities." "Possible"? I'm going to send him an email. I'm going to suggest that for "$1.7 million, I'll write them a "detailed business plan" and get some fucking nancy twit to sketch up a "functional design" AND construct the fucking thing! Jesus! They're fucking baby ballet dancers for fuck's sake! It's a barre, a mirror and a sprung floor!
Subtextual pointe ... sorry, point 1: Reward hapless mediocrity.
But it is the Business of Film Investment (everyone knows there is no such thing as a Film "Industry" in Australia) that received a nasty jolt last night. Perhaps it's a good thing ... but it's impossible at this early stage of analysis to be even remotely optimistic about how the Federal Government have changed the rules of engagement for film investment in this country.
So what is, sorry, was the '10BA'? The 10BA was a piece of paper ... a form. With '10BA' in the top right hand corner. I've filled a couple out ... I know what they look like. What it represented was a 100% tax concession in investment in film for the financial year after the one in which the investment took place. For example, in the financial year 2005-06, someone invests $100,000 in a film. At the end of the following financial year, in this case 2006-07, they would be able to claim a concession of the $100,000 they had invested in the film. Let's be clear about this ... 100% - whether you got a return on your investment or not. Which would never eventuate in most cases - and not be expected to. Hence, the tax concession.
Of course there were conditions. In order to qualify for the mighty 10BA incentive, every single aspect of the film had to be undertaken in Australia. You couldn't think about your film while farting in LA without compromising your film's eligibility. Baz Luhrmann's Bazmark Films' Moulin Rouge investors were involved with a rather ignominious association with the 10BA when it was revealed that Luhrmann had actually completed some post-production offshore (in either Spain or LA I think). And lo and behold, come the end of the following financial year, the Moulin Rouge investors were denied their 10BA eligibility. The Sydney media went mad, with The Daily Telegraph (ironically, or not, published by Rupert Murdoch's News Corporation who also own Twentieth Century Fox - the film's distributor) ran with a big, black, bold headline: "Moulin Scrooge!" What was peculiar about this particular tabloid outrage was that The Daily Telegraph was (and is) not renowned for it's concern for the business of Arts and Culture. This particular fuck-up was, however, impossible to let pass unnoticed. To the best of my knowledge, I believe it even ended up on page 1!
There have been rumours for years that the Howard-led Federal Government have wanted to bury the 10BA. There may, in fact, be wise and beneficial reasons for doing so. But I seriously doubt it. Why? Because of this statement in the Budget Papers, clearly stating that the "phasing out" of the "current investor tax incentives available through Division 10BA and Division 10B of the Income Tax Assessment Act 1936 ... will increase estimated taxation revenue by $55.0 million over three years from 2008-09."
So there you have it in black and white: investments in Australian films under the 10BA and 10B are estimated to have a nett worth of $55.0 million dollars over three years.
Also to go is The Film Licensed Investment Company (FLIC) scheme, which according to the Budget Papers: "... will not be renewed beyond its current expiry date of 30 June 2007." The FLIC scheme was a radical plan to test new methods for the Federal Government and the "Australian film and television industry" to work collaboratively to raise investment for local film production. A single licence was awarded to Mullis Capital Film Licensed Investment Company who were apparently " ... able to raise up to $10 million in each of the years 2005–06 and 2006–07." Under the FLIC scheme, the 100% tax concession was payable up-front, instead of having to wait until the end of the following financial year (as investors would need to under the 10BA system). At this point, I have not seen any evidence of the success (or failure) of the FLIC scheme ... but it would be reasonably safe to assume that it has not worked.
So what is replacing the 10BA, the 10B and the FLIC scheme?
This, from the Budget Papers: " ... a new producer tax rebate, by which Australian producers will be eligible for a 40 per cent refundable rebate on feature films and a 20 per cent refundable rebate on other media productions, including television series, documentaries, and mini-series. To be eligible for the rebate, productions will be required to meet criteria, including creative control by Australians, and minimum qualifying expenditure thresholds depending on the type of production."
And this: "The producer tax rebate will also include a component for international producers, incorporating the previous refundable film tax offset (RFTO). This will provide a 15.0 per cent rebate for eligible expenditure, compared to the RFTO’s current 12.5 per cent. Eligibility for international producers will be extended beyond the criteria for the RFTO to include post, digital and visual effects production in Australia, where the film itself is not made in Australia and qualifying expenditure exceeds $5.0 million."
And this: "The Australian Film Commission (AFC), Film Finance Corporation Australia (FFC) and Film Australia Limited (FAL) will be merged into a new, single agency – the Australian Screen Authority (ASA), scheduled to commence operations from 1 July 2008." Jesus! Can you imagine what kind of a hideous, protectionist, mutant bureaucracy the ASA will be(come)?!
So 100% becomes 40%. And the Australian Ballet School might get a new roomful of new barres.
What was in The Budget for you?