House of Representatives

Taxation Laws Amendment (Film Incentives) Bill 2002

Second Reading Speech

Mr McGauran (Minister for Science)

That this bill be now read a second time.

It is with the greatest professional and personal pleasure that I move the second reading, knowing that the Taxation Laws Amendment (Film Incentives) Bill 2002 is a landmark bill both for the film sector and taxation law. It creates a range of precedents and is unique in Australian taxation and film history for the scope of the incentives it provides to that sector for investment in Australian productions, creating great work for our technicians and our actors as well as the flow-on cultural effects. The bill creates a refundable tax offset for film production in Australia. This was announced by the government on 4 September 2001 as part of its `Integrated Film Package'.

These measures are designed to give effect to the government's strategy to provide an incentive to attract expenditure on large budget film productions to Australia. This is aimed at providing increased opportunities for Australian casts, crew, post-production and other services to participate in large budget productions, and to showcase Australian talent, with flow-on benefits for employment and skills transfer.

The incentive has a number of eligibility criteria, which are specifically aimed at large budget film productions that have significant production expenditure in Australia. In particular, films will have to meet a minimum requirement of at least $15 million in qualifying Australian expenditure to be eligible. Films with at least $15 million but less than $50 million in qualifying Australian expenditure will have to spend 70 per cent of their total expenditure in Australia. Films with qualifying Australian production expenditure of $50 million or over will not have to meet the 70 per cent requirement.

The provision of a refundable tax offset will allow Australia to compete internationally for large budget film productions. The refundable tax offset is to be applied at a rate of 12½ per cent to qualifying Australian expenditure of a film project. This incentive is expected to amount to approximately 10 per cent of a film's cost of production, varying as qualifying Australian expenditure is more or less of the total production expenditure.

Eligible films must have been completed on or after 4 September 2001. The refundable tax offset for film production expenditure in Australia is effective from the announcement date and can be claimed from the income year ended 30 June 2002.

Since the government announced its plan to provide a refundable tax offset for film production in Australia, consultation has occurred with domestic and international large film studios, film producers and film industry peak bodies. On balance, the government considers the consultation process involved with this measure to have been extensive, positive and worth while. I would like to thank all those involved in that process for their effort in contributing to the development of this bill.

Too often the effort invested by everybody with an interest, directly or indirectly, is taken for granted in revolutionary or reformist legislation of this kind. As Minister for the Arts and the Centenary of Federation in the previous ministry of this government, I have some knowledge of the work, effort and dedication that so many people brought to this legislation. There are a great many people to thank. It is extraordinary just how many people have an interest in this legislation and how many people have worked to translate what was a simple principle-to attract foreign productions to Australia for the obvious reasons already touched upon-into credible, transparent and effective tax legislation. It is a long journey from agreeing on a principle to presenting a bill such as this in the parliament.

I would like to thank the industry, in all of its diversity, for involving itself in the process. I know that Senator Alston, as the Minister for Communications, Information Technology and the Arts, was the driving force behind the legislation-the 'leader of the band', so to speak. I also thank his staff, who brought so much of their expertise and patience to the process. In that, they were skilfully aided by the Department of Communications, Information Technology and the Arts. A very competent team, led by Megan Morris, has now seen this potentially complex legislation reduced to an easily understandable formula which will provide the necessary incentive to continue big foreign productions in Australia. I also wish to thank Catherine Murphy from the Prime Minister's office, who was a rallying point for all of us and a major entry point to the government for the industry.

The initial success of the film tax offset will depend to a large degree on the clarity and certainty offered by the administrative processes and on ensuring that a time frame which is appropriate for the film industry is built into the mechanisms for dealing with applications to receive the offset. It is vital in this context that those agencies responsible for the offset's administration work together to embrace these principles to ensure that the greatest possible benefit for the film industry accrues from the offset.

It is very timely that the bill is introduced into the parliament, when a number of Australian actors and others associated with the making of films have been nominated for Academy Awards. We do not rely on foreign production to build our domestic or indigenous industries. We know that, for all intents and purposes, they are separate entities-except for the skills transfer between the two, especially by technicians-but we know that the two can coexist and there is some potential, if not real, flow-on benefit to the domestic industry by having these foreign productions. We certainly know that the skills base is greatly expanded and enhanced by the foreign film production taking place in Australia.

On behalf of the parliament, I wish to congratulate the Australian nominees for the Academy Awards. We wish them all the very best. They have tasted success at the Academy Awards previously, and I have little doubt that we will again see an Australian come away with an Academy Award.

Full details of the measures in the bill are contained in the explanatory memorandum, which will be circulated to members and which I now table. I commend the bill, in all of its goodness, to the House.

Debate (on motion by Mr Albanese) adjourned.