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Dark days loom for Aussie film industry

By Peter Mitchell
December 23, 2003

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The Matrix series was filmed in Australia

David Pratt's office is on the 19th floor of a tower in Los Angeles, just across the road from the Twentieth Century Fox studio lot. It's also a short walk to the new Metro-Goldwyn-Mayer tower.

It's a convenient location for Pratt's role as AusFILM's Los Angeles-based commissioner.

His job is to entice Hollywood studios to shoot in Australia instead of Canada, New Zealand, Mexico, South Africa, eastern Europe and the US.

Locked away in Pratt's office is a confidential list of 31 film and television projects Hollywood studios plan to shoot somewhere in the world in coming months.

In early 2001, when the Australian dollar was worth around 50 US cents and the images of large passenger planes crashing into skyscrapers did not exist, Pratt's workday was easier.

Hollywood, benefiting from a half price Australian dollar, could save tens of millions of dollars shooting the Matrix trilogy, Moulin Rouge, Star Wars: Episode II - Attack of the Clones, Kangaroo Jack and Peter Pan in Australia.

Hollywood stars looked forward to living in harbourside apartments in Sydney, or luxurious homes in Queensland, for six months while they made films at the Fox Studios lot in Sydney or the Warner Roadshow Movie World Studios on the Gold Coast.

Today, the Australian dollar has soared above 70 US cents, a level that significantly erodes the budget savings Hollywood enjoyed in Australia in 1991.

That 70-plus US cent level is too high for some in Hollywood.

Hollywood producer, Lucy Fisher, who chose the Gold Coast as the shoot location for the $US100 million Peter Pan fantasy film, admitted to AAP she would not have made the film in Australia at the Aussie dollar's current level.

Also hurting the Australian film industry are global security concerns. The September 11 terrorist attacks, the Bali bombing and wars in Afghanistan and Iraq made Hollywood's top actors and directors more reluctant to spend several months shooting a film in Australia.

Working in a country a 14 hour flight from their homes and families in the US became too much of a sacrifice, particularly for Hollywood's A-list who hold the power to pick and choose where a movie is made.

Another dark cloud for the Australian film industry is the impending Australia-US free trade agreement. There are fears an FTA could erase the 12.5 per cent tax offset the Australian government successfully introduced to woo Hollywood.

Then there is the burly figure of Arnold Schwarzenegger.

The Terminator star, now Governor of California, has vowed to halt "runaway" production and bring film and TV projects back to Hollywood.

"In the six years I have been doing this job I haven't seen it this tough," Pratt told AAP.

Of those 31 projects on Pratt's confidential list, only "a handful" of studios were seriously looking at Australia as the shoot destination.

The projects have budgets ranging from $US10 million to over $US100 million and would generate thousands of jobs for Australians in the film industry.

"Seriously looking at Australia?," Pratt asks.

"There's a handful, around four or five, and I'd be really happy if we landed two or three of those."

A more dour statistic is the number of major film and television projects lost.

Pratt estimates the current economic and world security conditions contributed to Australia losing 10 Hollywood productions in the past year.

"There's been many," Pratt said.

"I can't tell you what they are because it's highly confidential. I can probably tell you this year alone we would have lost 10."

They included several TV series, some TV movies and some feature films with budgets between $US50 million and $US100 million.

Pratt's experience at the coalface in Hollywood is reflected in figures released by the Australian Film Commission (AFC) for the  2002/03 financial year. For the first time in eight years feature film and TV drama production in Australia dropped.

Total expenditure in Australia in 2002/03 fell by 23 per cent to $US513 million, compared to $US663 million in 2001/02.

The number of feature films made in Australia slipped from 39 to  26 while foreign features decreased from seven to five.

The lack of Hollywood and other foreign-financed film production in Australia resulted in a 63 per cent fall in feature production in Australia from $US131 million in 2001/02 to $US49 million  2002/2003.

The rise in the Australian dollar is partly to blame.

"If we went to 80 US cents I think I would be looking for a new job," AusFILM chief executive Trisha Rothkrans joked.

"But at the moment we still have inquiries from overseas coming in."

Rothkrans says Australia is still competitive and points to two Hollywood feature films, Stealth (starring Jessica Biel and Josh Lucas) and Son of Mask (US comedian Jamie Kennedy), scheduled to shoot at Sydney's Fox Studios.

While Australia does not have as much bang for its buck as what it did two years ago, Australia still has some attractive traits to woo Hollywood studios, according to Rothkrans.

"We work in different ways. We work with less crew and in a much more competitive way and I think everyone is happy with the finished product," she said.

"When you look at the Matrix trilogy, it is such a good calling card for all of our technicians."

The state-of-the-art film studios in Sydney and on the Gold Coast and the new facility being built in Melbourne provides facilities equal to any in the world.

The problem during 2003 was the Fox and Gold Coast studios were empty for several months.

The Gold Coast studio lot was the home to the $US100 million production Peter Pan for almost 12 months, until shooting wrapped in June. Since June the lot has virtually been empty.

The fantasy film based on J.M. Barrie's classic tale was funded by three major US studios Columbia Pictures, Revolution Studios and Universal Pictures and with a $US100 million budget, it ranked as one of the most expensive films made in Australia.

The film was shot entirely inside sound stages on the lot.

So why shoot Peter Pan in Australia if it was a film made entirely within sound stages? Under that environment it could be made anywhere in the world with suitable facilities.

"Money," Hollywood-based Peter Pan producer Lucy Fisher said.

"We saved a lot of money by shooting in Australia."
Fisher was just as succinct when asked if she would shoot Peter Pan in Australia today with the Australian dollar above 70 US cents.

"No," Fisher said.

When Fisher and producing partner Douglas Wick selected the Gold Coast as the shoot location the Australian dollar was worth about  50 US cents. The duo managed to lock in some of that cheap currency to protect the production from any rise in the Australian dollar.

"We started at about 50 cents, so we were getting 50 per cent more," she said.

Fisher, a former vice chairperson of Sony's Columbia Tri-Star Motion Picture Group, estimated between $US8 million and $US10 million was saved by making the film in Queensland instead of the US.

That $US8-10 million saving was poured back into the production with better special effects and sets. So, Peter Pan was actually a $US110 million production.

"If we had shot it in the US you wouldn't have seen as much on the screen," said Fisher, whose other film producing credits include Men in Black, Jerry Maguire and Stuart Little.

"We would have had the same amount of money but we wouldn't have had as much. We built everything. It was like an old-fashioned  1930s movie where we took over the whole studio and built everything."

At least two films the sci-fi film I, Robot starring Will Smith and the thriller Gothika starring Halle Berry and Penelope Cruz were pencilled in for Australia but were lost to Canada because of a number of factors, including the reluctance of cast and senior crew members to spend extended periods in Australia.

"The war in Iraq made actors and directors more nervous to travel because they want to be home with their families," AusFILM's Pratt explained.

"Canada is only a couple of hours flight from LA, particularly Vancouver. That's an important factor, particularly large budget feature films with A-List actors and directors who have so much power in where things are shot."

Ask Hollywood-based director Richard Donner about shooting a film in Australia and he jokes: "It's tough on weekends if you want to go home and see the family."

Donner and wife Lauren Shuler Donner are one of the most powerful couples in Hollywood. He is a director and producer. She is a producer.

They know how to make a film on a tight budget.

They also know how to make them on a $US100 million-plus budget.

Donner directed Mel Gibson's four Lethal Weapon movies, he shot Christopher Reeve in Superman: The Movie and a string of big-budget Hollywood productions, including Julia Roberts in Conspiracy Theory and Sylvester Stallone in Assassins.

Shuler Donner has the two X-Men films on her resume and is working on the third as well as a spin-off movie for Hugh Jackman's X-Men character, Wolverine.

The couple combined their expertise to make their latest project, the time travel adventure film, Timeline, starring Australian actress Frances O'Connor.

Donner is proudly American and during his interview with AAP wears a badge promoting Retired Army General and US presidential candidate Wesley Clark. But as patriotic as Donner is, he understands every movie he makes cannot be made in the US.

Timeline, like most Hollywood productions shot outside the US, was made in Canada.

"The bottom line, it comes down to cost," Donner said.

The incentives the Canadian government provided Hollywood filmmakers, Shuler Donner said, also made the decision to shoot north of the American border financially attractive.
"They give you all kinds of things, incentives, they do actor buyouts on residuals," she said.

Asked if the rise in the Australian currency to over 70 US cents would push him away from shooting a film in Australia, Donner said "99 per cent" of the decision on where to make a film "is motivated on a monetary issue".

"If you are impacted adversely you think twice about going," Donner said.

"We try not to. We just want to make the film where it is best suitable."

Australia's rival in rugby, league and cricket, New Zealand has emerged as a force in movie-making.

Ask executives in Hollywood about making movies outside the US and New Zealand, along with Canada, Australia and eastern Europe will more than likely be mentioned.
That wasn't the case three years ago.

The Lord of the Rings trilogy and the success of TV series Xena: Warrior Princess and Hercules: The Legendary Journeys put New Zealand on Hollywood's radar screen.

Tom Cruise's The Last Samurai was largely shot on farmland in New Zealand's north island. Gwyneth Paltrow shot some of her new film, Sylvia, in New Zealand and Rings director Peter Jackson is preparing to shoot King Kong in his homeland.

A new Power Rangers TV series is being made in NZ, two Hollywood TV movies are scheduled to begin shooting after Christmas and a Seth Green comedy, Without a Paddle, and a Miranda Otto film, In My Father's Den, are being made there.

"There are number of big productions looking at setting up operation in January and February. I'd love to tell you but I'd be taken out and shot," assistant manager of screen production for Investment NZ, Paul Voight, said.

Voight says even if the $US300 million spent in creating the Rings trilogy was excluded, New Zealand has enjoyed "steady growth in overseas production" in recent years.

"Spending $US300 million creates a distortion in any long-term statistics. But it's still trending upwards without Rings."

But New Zealand doesn't view itself as a competitor to Australia. Voight says New Zealand works alongside Australia to attract Hollywood projects for both countries.

"We actually tell people straight up front if a particular film will be perfectly suitable for, say, Queensland," Voight said.

"We don't have the beaches where you can jump into the water 12 months of the year without a wetsuit.

"You couldn't have really made Lord of the Rings in Australia, or Vertical Limit, and I don't think you really could have made The Last Samurai in Australia.

"Similarly, you couldn't have shot The Thin Red Line in New Zealand because we just don't have that type of jungle or the Matrix which needs a big city."

The New Zealand government has formulated what it calls a 12.5 per cent expenditure grant to overseas filmmakers, an incentive similar to the Howard government's 12.5 per cent tax offset.

But as rosy as what the New Zealand film industry appears to be, Voight said the industry has also suffered from the strengthening of the the Kiwi dollar against the greenback.

"Australia, New Zealand and Canada have been knocked around," Voight said.

"It's the free-falling US currency that's hurting us all.

"A lot of films were budgeting in New Zealand at 51 or 52 US cents and suddenly that 10 cent hike has really knocked things around."

Voight said a film with a budget of about $US50 million was scheduled to be shot in New Zealand but the producers pulled the plug on it partly because of the currency rise.
AusFILM's Pratt says he has seen a change in attitude in Hollywood in recent years.

With governments in Canada, NZ, eastern Europe and Australia offering tax incentives and subsidies to shoot in their respective countries, Hollywood, more than ever, is looking at the bottom-line.

"Here's a really good example. Last Thursday night I ran into a senior executive for one of the major studios in town and we had a chat," Pratt said.

"She's in the tax side of the business and she basically said to me it's really where they can get the best deal and that comes down to incentives. It's a combination of incentives and of course the dollar exchange rate. It still has to work creatively for the director of course, but it comes down to that now.

"Ten years ago it wasn't that important.

"The incentive side of it has become such a driving force now it's become extremely competitive."


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