FFC GUIDELINES DISCUSSION
26 MARCH, 2007
by Mark Poole
This article was first published on Screenhub, the online journal.
The winds of change are upon us, it seems. It reminds me of the Chinese curse to live in interesting times. The government’s review of our major Federal film agencies hangs over us like bushfire smoke, and as we cough and splutter to eke out a living, we filmmakers consult the oracle to discover which way the winds may blow.
Thus there was a large turnout of industry people at the Film Finance Corporation’s briefing on proposed changes to their guidelines in Melbourne at the Water Rat Hotel, South Melbourne on Monday, March 26.
The sky was dazzlingly blue, the climate warm and the mood sociable. Brian Rosen is always fun to listen to – the dollops of Irish charm make unpleasant news all the more palatable. It was clear that this was not to be the day when a filmmaker would be provoked to scream ‘this is insane and I’m not going to take it any more.’ Quite the opposite, in fact.
Perhaps we’ve all been ground down by the Howard years into meek submission, or maybe we feel it’s pointless arguing about a few crumbs when the entire table is about to be upended.
Brian Rosen, Mary Anne Reid, & Ross Mathews addressed us from the table (but mainly Brian. The packed audience included Victorian heavyweights such Sandra Straulig, CEO of Film Victoria, as well as local filmmakers of the ilk of Tony Ayres, Sally Ingleton, Tony Wright and Robert Connolly, who is now proudly claimed as a Melbournite.
To commence proceedings, Brian announced that the FFC’s intention was not to change the guidelines much since the industry review was just in front of us. This reinforced the sensation that we were gathered to polish a section of the film train track, in the full knowledge around the bend, just out of sight, some bastard is laying a stick of dynamite.
Brian left his interpretation of the review’s progress until the end of the session, but since it frames the entire discussion we’ll put it first.
THAT GOVERNMENT REVIEW
Brian shared with us the information he has on the progress of the Government Review, which in case you’ve been on a desert island free of internet access, was initiated last year to see, amongst other things, if various Federal film bodies should be merged.
Essentially Brian believes that merging of the AFC and the FFC is a done deal, since virtually none of the submissions to the review opposed it, and since it is an objective of the Government to merge all mergeable agencies in order to save costs. However, even if this is the case, the timing of any merging, and the number of agencies to be merged, remains unknown.
Everyone was hopeful there would be an announcement before the budget. The review has apparently been to the Estimates Review Panel and they didn’t knock it back, but now it looks like any decision probably it won’t be announced until the Budget. On the other hand, in the current political environment it is possible that the government may look for things to announce to the electorate outside the Budget machinations, and the film review may be one of them.
Some FFC Board members have had discussions with Treasurer Peter Costello, and some have met with PM John Howard, and yet others have met with Communications Minister Senator Helen Coonan. But there is still no real indication which way the Government will jump.
One positive sign is that nobody is going around insisting that the Federal Government seek to save a specific target by a merger, say 20% of the revenue. However the Government would expect to see reduced overheads, with as much taxpayer funds as possible going into the industry, said Brian. Of course a merged body could save $500,000 by losing one Board and a CEO.
As well as the question of whether any film agencies will merge, and if so how many, the other topic on everyone’s minds is the issue of a tax offset for film and TV production.
“We have said the tax offset should be 40% for feature films, 30% for high end TV drama and documentaries and 20% for others,” Brian told us.
It is well known that Treasury in particular loathes the idea of a tax rebate system that is open-ended, as they will have no idea of what it may cost. However, Brian suggested that it would be possible to adjust the tax offset over a few years without destroying the certainty that producers require to make the scheme work.
“They’re looking at a foray over 5 years,” Brian explained. “If it’s overheating over two years, the government can slow it down by offering say 35per cent instead of 40per cent.”
Producers must have certainty because they have to borrow the money or get an investor, so they have to know that the government will still have the money and not have run out. They could have a system where they issue a licence where if you are in production within 6 months you put in the certificate and get access to the offset.
Brian told us that he believes the Government understands that for a tax offset system to work, they have to offer a reasonable percentage, as they have learnt through FLICS that if they don’t provide enough incentive, investors won’t buy into production and the whole thing will flop.
“The Gonski report recommended a tax deduction of 120per cent for the FLIC Scheme, but the government only did 100% and it didn’t really work. The government fully understands that there is no point in putting in an offset unless it’s going to work for the industry,” Brian told us.
Brian said that to deal with the sort of rorting that went on with some projects in the early days of 10BA, they may put a cap on the above the line budget of say 20 or 25 percent.
“I feel that the offset will happen,” Brian concluded. “My understanding is that all the papers that have gone forward are about the offset. Peter Costello and Senator Nick Minchin are in approval, it seems. The offset should work in its own right.”
There was some discussion about how producers would use the tax offset and how they would cash flow a production once the offset was guaranteed by the government. Brian noted that some ‘smart operators’ are already working out how financial institutions could lend producers money on the basis of a future tax offset.
Of course, any tax offset scheme might stand alone, or it may work hand in hand with existing agencies, or their merged variant. It could be argued that a tax offset game should be the only game in town, but in fact the agencies will always fund some feature films and documentaries etc via Indivision and so on. So the interrelationship between various funding schemes is yet to be worked out.
“What you don’t want,” Brian said, ”is everything – including the tax offset - relying on the funding from the merged agency because then you end up with a single door.”
Mary Anne said that there had been strong advocacy for a decent tax offset to allow the program to be effective, and there has been some acceptance that this needs to be done. However, she pointed out that in the end it’s all a matter of politics, and the amount of money available to our industry may get reduced through the political process.
Brian commented that some people have pointed out that the industry already has 10BA, we have agencies getting money for production, we have an offset for offshore films, and now we want an offset for domestic films. Apparently Costello has pointed out that it was all too complicated and you need to simplify it. Brian added that people on all sides of politics get confused about who the film agencies are and what they do, and he is often introduced as the head of the AFC, for example.
Brian hopes that the offset could simplify things. “I would like to see 10BA keep going, but they may put a sunset clause on it, say in two or three years.”
“Any tax offset has to work for the industry, and it has to allow for a diversity of films.”
Brian noted that under a tax offset scheme, the films will have to qualify as an Australian film. “The UK has done it, the Germans have done it. We should too.”
FILM
Brian told us that since the evaluation door has been around for two and a half years now, so it’s a good time to get some feedback on how it has been going, and see what we can learn from that.
He reported that over that time 116 film projects had applied to the FFC through the evaluation door. 37 received a letter of intent, and of those 29 have been financed and 10 released. That ten includes two feature documentaries. 9 projects didn’t get letters but 6 got funding through the marketplace door, and three others reapplied and got a letter of intent the second time around.
As well, 16 other films were financed through the marketplace door.
Of the films that were released via the evaluation door, it’s been a mixed bag, said Brian.
Jindabyne did $5.2 million at the domestic box office but others haven’t fared as well as we might have hoped.
Brian reminded us that the FFC hoped that the evaluation approach would generate international appeal. He noted that of the 10 evaluation films released to date, 9 have been invited to one of the ‘A’ festivals – Sundance, Cannes, Berlin, Toronto, Venice.
In the past the hit rate hasn’t been as good. As well, 5 of the 10 films went to Cannes, and 7 went to Toronto. Brian suggested that being invited to one of the A festivals facilitates a film being sold to international territories, saying that of the films that did go to these A festivals, nearly all sold to around 20 territories worldwide (although he didn’t provide any indication of how much revenue these sales produced.)
As far as the Feature Film Guidelines were concerned, the FFC isn’t looking to make any changes this year, until we know the outcome of the industry review. However, Brian flagged the possibility that in future the FFC might provide marketing assistance to filmmakers.
Mary Anne Reid told us that she’d talked to all the filmmakers of films that were released and all the distributors from July 05 to December 06. It was a distribution survey to see how these films were being marketed.
Brian commented that every distributor tries to do the right thing by their films, but the FFC was interested in how the distributors decide how much money to spend on the release of a film.
At the March meeting the FFC Board suggested that the FFC should look at whether it can put some money up for marketing for feature films.
The idea is that the FFC could help producers by funding test screenings, or to test the trailer or poster with audiences. They could put up say $20,000 or $30,000 for a film.
“Everyone is scratching their heads about Suburban Mayhem,” Brian said. “It got AFI nominations and went to Cannes, but it didn’t go anywhere in the marketplace.” Apparently distributor Icon felt it fell between two stools, not attracting the youth market but also older people didn’t go for it either.
For our films, especially smaller films, perhaps we should be doing a road tour like the Kenny people did with the lead actor – but this costs money to do. Distributors may pay for some of that, but they won’t pay for the talent to travel around the country, or for their time. Perhaps the FFC could put up some money to facilitate this.
Also you may want to keep a publicist on for 5 or 6 weeks, not the 2 or 3 they currently do in a normal release.
Brian gave the example of the film Clubland which is opening wider than expected in the United States. Does this mean it should be opened wider in Australia? Maybe it’s worth buying some TV time? Distributors wouldn’t pay for it. but perhaps the FFC could.
If the FFC was going to play a role in marketing a film, to achieve that, when a film comes in and gets FFC approval, there should be a meeting between the FFC, the producers and the distributor about how the film is going to be distributed. So that if later on the film does a step-up and the producers feel that an increased marketing push is warranted, the FFC is better versed about putting in the money. “We have to be careful that the distributor isn’t lowballing their film in order to access the marketing money,” Brian warned.
Sue Maslin suggested from the floor that the proposal was an excellent thing to explore. She commented that the move shouldn’t be seen as taking money away from production finance, as it should generate revenue flowing back to the FFC.
Robert Connolly commented: “If distributors put up a large advance they’re already very exposed, but the FFC could say we’ll return 1.5 per cent if you get a TV sale.”
A discussion ensued about how to help our local project in the marketplace. Someone said that the problem is our films have to compete in the multiplexes against the US blockbusters, and if our films don’t work in the first weekend, they will be pulled.
Brian said that the FFC is going to do a research study to see what local audiences make of Australian films. “Most of our films attract the 40 plus or 50 plus audience,” he told us. “They are baby boomers who have loyalty to Australian films. Younger people may not have that loyalty. Or, maybe when they get older, they will.”
Tony Ayres commented from the floor that arthouse films are doing fairly poorly throughout the globe. It’s about general changes in viewing habits, as well as technological changes.
Mary Anne Reid mentioned that in Denmark people were looking at Brand Europe to encourage people to see local films.
Tony retorted that Brand Australia might work if it’s like Prada, but not if it’s like Target.
Brian mentioned that down in Canberra, they think our films suck. A lot of time people don’t know a film is on. The FFC may be able to help not to dictate what sort of films we can make but the research may help.
Brian reminded us that the FFC announced a while ago that they had money to do a children’s feature film. That money is still there. “We haven’t been knocked down in the rush,” he said. “We’ve tried to attract the younger audience of the future. I know it’s a totally different kind of film, but Happy Feet has taken $30 million here. The closing date for applications for children’s features is the beginning of August for the September FFC board meeting. These films are meant to appeal to young audiences, which means under 12 years old. The notional budget would be around $4 million. Distributors are wary about a kid’s film for school holidays, so the FFC would be looking at funding a P & A during the holiday period.
Brian commented that Razzle Dazzle is doing quite well in release right now, it’s nearly up to $1 million over two weekends, and now it’s into the school holidays, it could do $2 million. It shows that there is an audience out there for this kind of film.
Robert Connolly – how is the funding of one much larger film going?
Brian – we have spent this year’s money. There have been 2 projects talking about accessing that sort of money.If we are going to spend $10 million the director needs to be in profit or have won serious nominations. The producer needs a serious track record. The distributor must be capable of getting $10 million at the domestic box office. We need a good sales agent. We need to test the sales estimates for the territories. We need a marquee name in it as well - someone who has been in a film that has done big box office. So the criteria are tough but the two projects find that it is hard to get a foreign distributor when the film is finished for an Australian story, with a budget around $25 million. One of the projects has a big name director, but it’s still tough.
TELEVISION DRAMA
Brian announced that the FFC is not looking to make any changes whatsoever to the guidelines for TV drama. This year most of the rounds were competitive, and we worked our way through the applications.
Brian asked people what they thought of having four funding rounds per year.
Sally Ingleton said that all methods will be competitive. Having rounds is working as well as any other method.
Tony Wright: I agree with Sally. Rounds are inevitable.
There was some discussion about when the first round should be, in March or April. A filmmaker mentioned that the problem is the deadline for getting an application in. Brian said that this was often around February 9 for the papers to be in. “There is about 400-500 pages of paperwork which has to be read by Board members before the meeting,” he explained. “We don’t want the Board to be reading the papers on the plane to Sydney. They have to have time to read them properly, in advance.”
DOCUMENTARY
Brian said that as far as the international door in documentary was concerned, it was working well for the FFC. “The strength of marketplace is very transparent.”
Ross Mathews commented that it was not always fair. “But the documentary community hasn’t wanted us to evaluate projects.” He added that all the deals are different and it can get tricky.
Brian – We didn’t want it to become a Dutch auction. Is money from Screen Tasmania softer than Canadian money? It’s easier to operate as a percentage.
Tony Wright– it’s also more reliable because you know what is going to happen.
Sally Ingleton – sometimes you can get pipped at the post.
Brian – there’s nothing that stops you from coming back to another meeting, and that happened once, and when the project returned it came with a stronger market interest.
Sally – have you seen a trend in documentary applications to the FFC?
Brian – anything that goes to the Board meets the guidelines. Everything in the last round was asking the FFC for 40% or less, which was extraordinary. Maybe this shows that in docs the amount coming from the FFC for international projects was over 50 but now it’s less than 40.
John Moore – some projects are not quite getting there. Other projects have the ability to get the money but don’t have the quality. The criteria have been loosened over the past 10 years or so. Maybe we should tighten the definition of what a documentary is.
Brian – the quality docs are really strong at the moment. Maybe the broadcasters are promoting them more heavily, and not putting them on at 10.30 per night. They are getting audiences of 1.2 million or something. So why fiddle with the definitions with the review over our heads?
Sue – the local broadcasters determine the quality of the projects.
Brian – If the project is asking for less than 40%, you can have a reduced licence fee.
Sue – what about if a broadcaster isn’t involved?
Mary Anne: you run the risk of making a film that local taxpayers can’t get to see.
Brian – you can get a doc up with the FFC without a domestic broadcaster.
DOMESTIC DOOR
Brian said that as far as the domestic documentary door was concerned, the FFC has been looking at doing a notional allocation to SBS and the ABC of 500,000 each. “70 - 80 per cent of what we do is with them,” he said. “We would put in 50%, and the broadcaster would put in 50% of the budget.”
We do want to make sure that emerging filmmakers aren’t shut out by this, he added. “We would be looking at three criteria: one offs and series, diversity of subject matter and balance of emerging and experienced filmmakers.”
Stuart Menzies offered the suggestion that the FFC could spend 20% of its total allocation to documentaries, rather than the 15% they do now. But Brian explained that the FFC feels the support should go to features, as distributors don’t put in much, whereas in docs and TV drama about half the budget comes from the broadcasters.
“We are putting in $9.5 – $10 million or nearer to $12 million this year on documentaries,” he said.
And that was that. Time to reel out to the bar, to soak up a glass of wine, listen to filmmakers reiterating that it’s tough to make a quid out there, and thus homewards to St Kilda, dodging the still Grand Prix-nobbled Albert Park and the extra traffic from the Burnley Tunnel disaster.
|
