Thank you for the opportunity to provide comments on the draft report Industry Assistance in Queensland (the Report).

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1 July 3, 2015 ATTN: Mr Malcolm Roberts, Chairman Queensland Competition Authority GPO BOX 2257 Brisbane QLD 4001 Screen Queensland Pty Ltd. s (SQ) response to Draft Report: Volume 1, May 2015 Industry Assistance in Queensland, Queensland Competition Authority (QCA) Thank you for the opportunity to provide comments on the draft report Industry Assistance in Queensland (the Report). SQ agrees that well designed industry assistance measures should have a quantifiable positive impact on businesses and industry and enable the Queensland community to share in these benefits. We agree that industry assistance measures should continually be monitored, reviewed and reformed to ensure they are relevant and effective. For this reason, SQ recently made significant changes to its programs including developing new programs, guidelines and processes to ensure that the industry programs effectively and efficiently provide benefits to Queensland businesses, industry and the wider community. SQ does not accept the draft recommendations in section 10.4 (Recommendations) nor the case outlined in section 10.5, particularly as the QCA view is not consistent with a broad range of independent research and data available internationally. SQ holds the view that assumptions are flawed in this report, which results in our lack of confidence in these draft recommendations. SQ s response identifies a broader range of studies, as evidence in demonstrating of both the economic and cultural benefits delivered by the screen sector. Additionally, the Recommendations fail to take into consideration the scope of SQ s role and the intrinsic beneficial relationship between domestic screen production and the infrastructure, technical skills and equipment that is developed through international production. They also fail to take into account the measurable community benefits that flow on from both. It is imperative Queensland continues to invest in domestic production and international production. We strongly recommend that rather than reducing industry assistance to the film and television sector, funding should be increased to activate pipeline investment in the arts and culture sector in delivery of a culturally diverse economy for Queensland. Film and television investment generates benefits that provide jobs, industry growth and legacy infrastructure, as well as laying foundations for future pipeline investment that will be enjoyed by Queensland s screen practitioners now, and into the future. We question the references to the Massachusetts Department of Revenue report as this only focuses only on the US market. Massachusetts scheme is only designed to attract footloose production and is not comparable to Australia in that screen agencies in Australia

2 have as their core responsibility, developing and investing in local content which takes our stories and creative IP onto a global stage. In this regard, we respectfully request that you consider this response, including the internationally recognised data that gives evidence in support of a continuation of State Government s screen industry assistance measures on grounds of the cultural, social, tourism and economic benefits to this industry, business and the Queensland community. We welcome the opportunity to discuss Screen Queensland s response in more detail and the opportunities for the state that could be secured through enhanced investment to this industry. Yours sincerely, Tracey Vieira CEO Screen Queensland # 10.4 Draft report recommendation The Queensland Government should: (a) cease providing attraction incentives targeted toward major productions that deliver benefits largely appropriated by international production companies (b) focus assistance for film and television production towards activities that deliver net cultural benefits to the state (c) ensure that any incentives, where government chooses to provide them, are provided transparently. Screen Queensland position Not accepted. Not accepted. Not accepted. Screen industry assistance measures leveraging Queensland s competitive advantages SQ provides a suite of industry assistance measures to deliver on corporate objectives, as aligned to State Government priorities for the growth and international competitiveness of the Queensland screen industry. Industry assistance measures are intrinsically linked to the attractiveness and competitiveness of Queensland, as a premier location for screen production. In servicing Queensland s cultural policy objectives, these measures: create industry jobs and contribute to retention of Queensland talent, sustain Queensland-based production companies, leverage the significant private investment in vital hard infrastructure (optimise utilisation of the Village Roadshow studios), and provide skill development opportunities that advance career pathways for our local screen practitioners. International and domestic production does not and should not operate mutually exclusively from one another. The economic benefits that are derived from international and domestic production are reliant on a healthy balance being struck whereby both are optimised in the state. SQ provides a suite of industry assistance measures to deliver on corporate objectives, as aligned to State Government priorities for the growth and international competitiveness of the Queensland screen industry.

3 This is a position that has been endorsed and adopted by other states and countries, such as Victoria and the UK, whereby industry assistance for international and domestic production is undertaken at strong levels to deliver strong economic and cultural returns. (a) Queensland s investment in major productions delivers local benefits Sustains the local industry A distinguishing feature of the Australian context as experienced by Queensland and all other Australian screen funding agencies is benefits accrued from large scale international production, in support of delivery of cultural benefits. Developing the skills and capacity of the Queensland screen industry workforce also enhances our own capacity for storytelling on the world stage. Queensland s screen industry relies on the attraction of large budget international productions to support the infrastructure, equipment and skills to enable Queensland s local screen industry to have world class tools for its own productions where intellectual property is retained in the State. Importantly, there is an interdependency between large scale international productions given they develop the domestic industry as evident in retention of highly skilled practitioners, attachment programs for local skill development, through to spend in purchase of technical equipment such as camera s, visual effects computers, electrical and construction equipment, amongst others. International productions also support critical infrastructure in Queensland. A prime example is utilisation of the Village Roadshow Studios, with this infrastructure available for use by local productions. Major productions invest in Queensland infrastructure, such as the water tanks, which builds the competitiveness of the overall Queensland offer as a competitive filming location. This legacy infrastructure then becomes available for use by local practitioners. Further benefit is that Queensland has the opportunity to give exposure to our local talent on the world stage as large budgets result in large scale construction, costume design, make up and effects. Retains jobs, and builds career pathway opportunities Film and Television is an art form that contributes to the knowledge capital and a sector of creativity and exploration, economic development and cultural importance. Deloitte Access Economics (Deloitte) February 2015 report Economic Contribution of the film and television industry in Australia (Deloitte Report) states film and television sector remains a significant contributor to the Australian economy and estimates that in the industry directly contributed $5.8 billon to Australia s GDP. The diversity of the film industry s impact on the Queensland economy represents the objectives articulated by the Queensland Government in stimulating economic growth and innovation, as well as building its regions. SQ ensures that Queensland Production Expenditure is generated which has direct links to sustaining employment in Queensland s film industry, with the Deloitte Report advising that in the production sector was the greatest contributor in terms of employment with some 13,000 FTE employees and makes the 2nd largest contribution (behind free-to-air TV) to GDP with approximately $996 million in value added.

4 Specific to Queensland, the Deloitte Report noted that in the film and television industry contributed approximately $833 million value added to GDP and employed 6,655 FTEs. (b) Queensland s investment in screen culture delivers cultural benefits to the state generating economic and cultural value Employment and Output The Paper suggests there is limited evidence that funding for Film and TV production is any more effective in generating output and employment than funding any other industry. However, there is empirical evidence to demonstrate the economic and cultural contribution of the film and television sector in Australia. The Deloitte Report states i that in the Film and Television industry directly contributed $5.8 billion to Australia s gross domestic product (GDP) with approximately 46,000 full time equivalent employees (FTE) and the greatest contributor was the screen production sector creating 13,000 FTE s. A number of Australian and international studies support Deloitte s view including, but not limited to: Olsberg SPI: Impact analysis of fiscal schemes supporting film and audio-visual production in Europe. This report notes: almost all of the incentive structures provide a greater return to the government than they cost to operate, whilst also providing standard trickledown benefits to the broader economy, also including in areas such as tourism and exports. Oxford Economics: The Economic Impact of the UK Film Industry: September This report noted that: Film Tax Relief is vital to sustaining the competitiveness of film production in the UK. It provides fiscal stability and alongside other location factors, such as the talent and skills of the workforce and ease of doing business, promotes the UK as a highly attractive inward investment for film production. Mind and Mood: Hearts and Mind Report : which showed that Australian audiences value local content as it provides a: sense of home and familiarity they experienced when watching Australian screen stories full of characters, humour, locations and a way of life they recognised and could connect with. Olsberg SPI: Quantifying Film and Television Tourism in England March 2015 Olsberg SPI: Building Sustainable Film Business July 2012 PwC 13th annual Australian Entertainment & Media Outlook Economic value SQ ensures that it maximises the economic and cultural return on international investment for this state. Screen Queensland s return on investment during 2008 to 2014 was 1:15. This means that for every $1 invested by Screen Queensland in production it generates a direct return to the state of $15. This ratio is evidenced in audited reports, based on actual

5 Queensland spend. This return on investment does not take in to consideration any indirect or flow on effects derived by allied service industries, such as injections into construction, transport and/or hospitality sectors. The Victorian Government, in recognising the significant contribution that the screen sector makes to its state, recently announced a $4.9 million increase in funding. This is in addition to the funding of $21.9 million that Film Victoria received directly from Government in 13/14. On the 5 May, 2015, the Victorian Minister for Creative Industries, Martin Foley stated: Our screen sector drives our creative industries, generating nearly $1.3 billion for Victoria s economy and providing jobs for 10,000 people each year. Similarly in March 2015, the UK Government announced an increase in its Film Tax Relief (FTR) program from a 20% incentive to 25% and lowered the threshold to receive this incentive in recognition of the benefit the UK s screen industries to the overall UK economy. UK film has seen significant growth in activity with the introduction of the 2007 FTR, as evidenced in an independent report titled The Economic Contribution of the UK s Film, High-end TV, Video Games and Animation Programme Sectors, produced by analysts Olsberg SPI and Nordicity and commissioned by the BFI, Pinewood Group plc, the British Film Commission, UK Interactive Entertainment (Ukie) and Pact. The report describes the benefits derived by the FTR which costs HM Treasury approximately 164 million a year, supporting an annual average production spend on film in the UK of billion. In simple terms, each pound of the FTR over the period 2007 to 2014 has generated in additional gross value. Without the FTR, it is estimated the spend on film production in the UK would be 550 million lower annually. In addition to job creation, investment in film and television retains talented and highly skilled workers in the state and assists in creating an economically and culturally diverse economy. Cultural Significance of a local screen industry presence Film and television has a unique capacity to connect communities and deliver greater appreciation for the culturally diverse nature of Australian society. We agree with the reports commentary regarding benefits of celebrating our heritage and culture that flow on from local and Australian screen stories may be significant. However, Queensland s cultural footprint is not made solely through the retelling of Queensland stories but also by retaining and up skilling Queensland s existing highly skilled practitioners. The retention and up-skilling of Queensland screen practitioners ensures that Queensland can continue to create and deliver unique stories to global audiences. We should not limit the scope of Queensland s IP creators to Queensland and Australian specific stories but celebrate the borderless opportunities that they can create. A number of Queensland practitioners first entered the industry through opportunities secured by international productions filming in the state and have gone on to start their own Queensland based production company or become writers, producers and directors in their own right. Investing in international and domestic film and television production provides a fundamental cultural building block that can deliver a culturally and economically diverse state. A good example of this is the production of content for Australian children.

6 Queensland through Screen Queensland supported productions has become a hub for children s content creators making local content for Australian children. This includes series such as Mako Mermaids, The Elephant Princess, Bushwacked, Balloon Barnyard, H2O: Just Add Water, Sesame Street (including the first indigenous segment ever on Sesame Street) amongst others. Queensland Academic Dr. Anna Potter stated in the below article that "Every culture needs to tell its own stories and see itself reflected back and for children to learn, to be situated in their own country and culture and to understand what it is to be Australian." [Read more: The most current release of the Australian Bureau of Statistics, Children s Participation in Cultural and Leisure Activities, Australia, April 2012, shows that the proportion of children watching TV, DVDs or videos fell slightly from 2009 (97% to 96%), while the proportion of children participating in other screen-based activities (including the use of a computer, the internet and games consoles) rose from 83% in 2009 to 85% in In the 12 months to April 2012, children spent more time watching TV, DVDs or videos than any of the other selected recreational activities. On average, children spent 15 hours watching TV, DVDs or videos outside of school hours in the last school fortnight, followed by 10 hours on other screen-based activities. In Child s Play: Issues in Australian Children s Television 2013, Screen Australia reported that Children s drama is both expensive to produce, and difficult to monetise. Children s television drama is the second most expensive type of television program to produce, following adult drama. In 2011/12, children s drama cost $667,000 per hour to produce on average; this is roughly in line with the five-year average. However, despite being expensive to produce, children s television attracts much smaller licence fees than drama for adults, both in dollar terms and as a proportion of the budget. While broadcasters provided 67 per cent of total finance for the adult drama slate over the last five years, they provided only 29 per cent of finance for the children s drama slate. Strict limitations on advertising during children s programming blocks on commercial free-to-air television make it more difficult for the networks to monetise children s content compared to programs for adults. Other types of children s programs, for example game shows, are among the least expensive types of programs to produce. SQ ensures, through supporting development and investing in production on children s content, that our children continue to hear Australian stories, voices and culture on screen, but additionally that our stories extend beyond our borders and share our culture on a world stage. Tourism Benefits Screen Queensland s production incentive agreements often include tourism related provisions designed to raise the profile of Queensland and increase tourism to the state. As noted in the report, large scale international productions provide unprecedented media profile of Queensland as a film making and tourism destination, and there are associated increases in tourism expenditure.

7 Filming locations can become valuable tourism promotion opportunities to profile key destinations including particular tropical beach destinations compared to competitor locations. For example, the Modern Family episode shot on The Whitsundays, Queensland, screened to a national audience of over 1 million and aired to 9.2 million viewers in the United States of America and reached an estimated global audience of 125 million viewers. We agree with the statement in the Paper that states increased tourism expenditure increases business activity and employment. This view is supported by Oxford Economics report which noted that the filming of Pirates of the Caribbean: On Stranger Tides lead to a 13% increase in visits to the Old Royal Naval College in Greenwich London. Olsberg SPI which was released a report Quantifying Film and Television Tourism in England and looked at the impact of screen tourism across England outside of London and showed that filming locations are attracting domestic and overseas visitors in abundance. The primary research undertaken for this report provides clear evidence that tourists will travel to sites specifically because they have been depicted in feature films and television drama. The report demonstrates that screen tourism is relevant for all types of content, from period drama to dark, contemporary stories, family fare to fantasy and sci-fi. SQ recently commissioned a report from Meltwater Pulse into the media coverage for Pirates of the Caribbean in conjunction with Screen Queensland, Australia, the Gold Coast, Queensland and Village Roadshow between 2 October 2014 and 22 March During this period, there were a total of 7,037 media articles published which had an estimated audience reach of 27.1 billon and an estimated advertising value of$251,025,107. ii Similarly for San Andreas in May 2015 (during its release) there were a total of 1,673 media hits which had a total audience reach of 4,752 million and an advertising value of $43,953,522. Cleveland Point in Redland City reported both an economic impact and boost to tourism after Pirates of the Caribbean shot in the location in June Redland City Bulletin reported on June 8, 2015 that: Most of the cast and crew stayed in the Redlands for most of the week and provided tremendous input into the local economy. They ate at local restaurants, fuelled their vehicles, booked up accommodation and patronised shopping facilities. The sight of Johnny Depp arriving at the VMR base at Cleveland Point costumed as his character Captain Jack Sparrow sparked a massive response from the community, with hundreds of fans and spectators turning out for a glimpse of the superstar. The result has been priceless international coverage for Redland City and this will be ongoing when the film is released in 2017 Channel Seven s Sunrise national program, crossed live to the set more than 10 times on one day alone. And over the duration of the three days in Cleveland Point, nine presenters, seven reporters, two television networks and a helicopter captured footage of the film and the location creating a spectacle and buzz in Redland City that was shared across the nation.

8 Another localized example of this is Winton which was home to a Queensland created feature film called Goldstone and which SQ was a major investor in. The film had 243 media hits during 1 January June 2015 during production reaching an audience of million. This has significantly contributed to the shires increased tourism profile which has population of approximately 1,430 iii. Winton Mayor Butch Lenton said productions like Goldstone could only help the local economy, which was being severely affected by the long-running drought. With the struggling rural industry, it is very important that we have all these little things to make things work a lot better in western towns. The promotion (of the film) would mean more tourists. Increased tourism is just one example of the flow on effect investment in film and television. (c) Importance of incentives to Queensland s competitiveness administered with integrity and accountability SQ s role is to ensure that the industry assistance provided is managed efficiently and delivers maximum economic and social returns to the state of Queensland, for every dollar invested. By way of example, investment in international production represents 13% of SQ s overall funding budget with the majority of SQ s funding applied to domestic programs including development, production and screen culture programs. The Paper is based on false assumptions The 2013 Economic Impacts of the Massachusetts Film Incentive Program (prepared by HR&A Advisors, Inc) report contains data in supporting investment in the film industry, including favourable results with the Massachusetts Film Tax Incentive Program. Key findings include: In 2011, the Incentive Program supported 2,220 full-time equivalent jobs in Massachusetts across all industries, generating $183 million in Massachusetts personal income and $375.3 million in spending (i.e. economic output) in the Commonwealth. Massachusetts awarded $37.9 million in film tax credits to program applicants in 2011, meaning that for every $1 of film tax credits awarded, $10 in spending was generated in the Commonwealth. Upon its completion, the construction of New England Studios will have supported 440 full-time equivalent jobs across all industries, generating $35.6 million in Massachusetts personal income and $62.3 million in spending (i.e. economic output) in the Commonwealth. Following a decline in the early 2000s, total Massachusetts motion picture production employment increased 46.1 percent from 1,630 jobs in 2006 to 2,380 jobs in Employment peaked in 2008 at 3,370 jobs, but subsequently declined in the aftermath of the Great Recession, and also likely due to the 2010 proposal to cap the Incentive Program. New studio infrastructure and the continuance of the Incentive Program in its current form positions Massachusetts to increase its motion picture production employment base going forward. Employment in the motion picture production industry in Massachusetts has grown at a time when overall private-sector employment in the Commonwealth has

9 declined. While Massachusetts motion picture production employment grew 46.1 percent between 2006 and 2011, total private-sector employment in the Commonwealth declined by 0.5 percent. The Commonwealth s share of motion picture production industry employment increased from 18th of the 50 states in 2006 to 11th in After the introduction of the Incentive Program in 2006, qualified production spending in Massachusetts surged to $480.9 million in Spending declined to $71.6 million in 2010 following a proposal to cap the Incentive Program at $50 million per year, but increased significantly to $176.0 million in Films that prominently feature locations in Massachusetts support the Commonwealth s $16.9 billion tourism industry. It is estimated that it would cost about $70.0 million through national television advertising to achieve the same number of audience impressions generated by exposures of identifiable Massachusetts locations in a sample of only five recent productions (The Fighter, Grown Ups, Moneyball, Ted, and The Town) SQ is transparent in its decision making SQ is consistent and transparent in its assessment of projects applying for production attraction funding. Each project is assessed against the following published assessment criteria to determine whether the project will: Increase the level of film and television production in the state of Queensland Increase the skills development and employment opportunities for Queenslanders working in the screen sector Increase business activity for Queensland based companies. Additionally incentives are only provided when a production meets: A minimum level of qualifying production expenditure; and A minimum level of employment of bona-fide Queenslanders. Therefore we reject the suggestion that we do not assess footloose projects in a transparent manner. Continued support of the Queensland screen industry We strongly believe in the Screen industry and our practitioner s ability to deliver strong cultural, social and economic benefits for the state. For the reasons outlined above, we reject the Recommendations and urge the Government to continue and strengthen its support of the Queensland screen industry. i Deloitte Access Economics: Economic contribution of the film and television industry in Australia: Australian Screen Association : February 2015 (Deloitte Report) ii The Meltwater Report measured the following: The number of Mentions (being number of media articles within the date range) The Reach (being the measure of potential articles) Ad Value (being an estimation of publicity value calculated by multiplying each reach by an industry standard formula. iii Office of Economic and Statistical Research: Queensland Treasury and Trade.