There may be a case for some limited support of films with content that enrich our culture by helping tell the Australian story but this does not justify public support for Hollywood productions with only dubious benefit to Australia, writes Gene Tunny.
A critical tweet recently posted by the chairman of Screen Queensland about Baz Luhrmann's film Australia, which starred Nicole Kidman and Hugh Jackman, was seen as risking the Queensland Government's effort to lure the $100 million Sea Hawk film production, which is to star Jackman.
Reportedly, the Queensland Government has outlined millions of dollars of incentives for Beacon Pictures to shoot the film in Queensland.
There is a policy issue at play here: whether it is desirable for governments to spend taxpayers' dollars on attracting international film productions, particularly when those dollars may have a better use supporting schools or hospitals, for example.
In recent years, governments across Australia have spent millions of taxpayers' dollars to lure to Australia, and to particular states, productions such as 20,000 Leagues Under the Sea: Captain Nemo, to star Brad Pitt and Angelina Jolie, and The Wolverine, starring Hugh Jackman. Also, Mr Luhrmann's production of The Great Gatsby was subsidised by an undisclosed amount from the NSW Government. But is there a rationale for government subsidies to the film industry, particularly given that, in many cases, foreign-owned companies will benefit from the assistance?
There may be a case for some limited support of films with Australian content that enrich our culture by helping tell the Australian story. Films such as Storm Boy or Breaker Morant may be seen in this regard, and many would argue such films yield benefits across generations, so it may be desirable to subsidise their production.
Even if the cultural protection argument were to justify some public support in the limited number of cases of culturally enriching films, it certainly does not justify public support for Hollywood productions with no discernible Australian content, such as Captain Nemo.
Of course, industry supporters would argue there is Australian content by virtue of Australians working on the production, but this is just an argument for government subsidising jobs. There is, however, no justification for the government supporting jobs in one sector over another.
Governments long ago abandoned the notion that they have a major, direct job creation role, and it has been a long time since the government has seen its role as employer of last resort, such as when state railways would employ otherwise unemployed young people as porters. The right policy is for governments to promote job creation with sensible fiscal and monetary policies and framework conditions such as flexible industrial relations and efficient market regulations.
Furthermore, the employment benefits of film productions are usually over-stated. The film industry is not a large employer, and, as would be expected based on the 'discontinuity and irregularity' of the industry, many of the jobs are temporary. A recent estimate is that, in Australia, of the 7,000 or so actors and directors who are practicing professionals, only 41 per cent, fewer than 3,000, spend at least half their time in industry jobs.
The policy of specific one-off payments to attract international film productions has even received criticism from Australian film industry participants. Academy Award-nominated film producer Grant Hill has described the discretionary payments for The Wolverine and potentially for Captain Nemo as 'fluky and flaky.' Of course, the domestic film industry does not oppose assistance, but it appears it may prefer replacing ad hoc assistance to attract international productions with enhanced tax offsets available to all.
Basically, film production companies in Hollywood and other centres are playing off governments around the world, and governments within the same country, to attract the best subsidies for their productions. This has attracted criticism, particularly in some US states, such as Louisiana and Michigan, which have noticed the purported economic and financial benefits of films do not offset the loss of taxpayers' money. Michigan at least has instituted a less generous set of incentives as a result.
From a policy perspective, it is preferable to provide what the Productivity Commission calls generally available measures – assistance promoting some desirable activity, such as R&D and innovation, not limited to particular firms or industries, avoiding the need to pick winners.
Governments should not be spending scarce public funds to secure films such as the Sea Hawk or Captain Nemo, particularly given public sector budget deficits and the need to fund future demands in education, health and disability care.
Gene Tunny is a senior consultant with Marsden Jacob Associates and a former Commonwealth Treasury officer. Views expressed are his own. Gene has a longer article on film industry assistance in the latest issue of The Centre for Independent Studies’ Policy Magazine.