A sign of things to come?
A story today in the Melbourne Age (”Diving dollar has gold lining for silver screen“) suggests the plunging Australian dollar will mean more international production for Australia.
“There is a major increase in interest for opportunities to film in Australia,” said Jenni Tosi, general manager of industry development and investment at Film Victoria.
“Basically, it means that they can get 40% more for their dollar if they come here (now) than if they came in July.
“It’s a highly competitive area. They look for the cheapest territory to suit their projects, and amounts as little as $25,000 have been known to be the difference between whether a project goes to one territory or another,” Ms Tosi said.
The Australian dollar is significantly lower against the US dollar today than it was in 2005-06, when big-budget US films Charlotte’s Web, Ghost Rider and Where the Wild Things Are were filmed in Victoria. A tax incentive for foreign producers has also increased since then from 12.5% to 15%.
The article is essentially about the cost sensitivity of some international production, but what it suggests is that the financial crisis may reinforce existing trends towards greater international mobility of production particularly those projects on which location decisions are made primarily by financial calculation rather than story considerations.
In the article, the Melbourne Film Office and Film Victoria, two local film commissions, are bullish about prospects. This is in stark contrast to the situation in the USA, where as the New York Times REPORTED a couple of weeks ago, the rising cost of taxpayer funded schemes to encourage film and television production in particular states has led to legislators tightening eligibility rules amid stories of inflated budgets and lack of local financial benefits flowing from the production. The NYT article traces the recent rush by states to implement tax incentives, credits and other schemes to attract production, to a ‘Defense against Canada’ law earlier this decade in Colorado. In fact, the trend for (usually publicly funded) film commissions and sub-national governments to offer subsidies or support to production has a much longer history both in and outside the United States: the emergence of Wilmington, NC, Vancouver in Canada and the Gold Coast in Australia as production locations in the 1980s was aided immensely by - if not the direct result of - either direct investment, tax incentives, loans, and other forms of support put in place by local governments.
More significantly, the NYT article contains the first criticism I have seen of the schemes which points out that they do not necessarily produce what is claimed for them when they are set up:
“There’s no evidence yet that this is a particularly efficient or effective way to create jobs,” said Noah Berger, executive director of the Massachusetts Budget and Policy Center.
The nonprofit center reviews budget and tax policies in Massachusetts, which is spending about $60 million a year on producer credits. A recent study by Mr. Berger’s center pointed out that the state’s film credit, at 25 percent, is five times higher than that offered to those who build in designated economic opportunity areas, and more than eight times the state’s standard investment tax credit.
“There’s no way you can say this makes money for the public” treasury, said Greg Albrecht, chief economist for Louisiana’s legislative fiscal office.In 2006, the last year for which it has complete figures, the state granted about $121 million in credits. Mr. Albrecht estimates that only about 18 percent of that is ever recovered in taxes on expanded economic activity.
“It’s an expensive way to create jobs,” Mr. Albrecht said. But he noted that Louisiana, like New Mexico, can afford it, thanks to rising oil and gasoline revenue. “We’re happy as larks right now to do this.”
The Massachusetts Budget and Policy Center report mentioned in the article is available HERE.



