Australian Writers’ Guild Submission to the House Standing ...

PresidentJanSardi EmeritusPresidentDavidWilliamson

Level4,70PittStreetSydneyNSW2000

t.0293190339f.0292238933admin@awg.com.auwww.awg.com.auABN.38002563500

AustralianWriters’Guild

Submissiontothe

HouseStandingCommitteeonCommunicationsandtheArts

inquiryintotheAustralianfilmandtelevisionindustry:

FactorscontributingtothegrowthandsustainabilityoftheAustralianfilmandtelevision

industry.

31March2017

Thisdocumentisnotconfidential

AustralianWritersGuildSubmissiontotheHouseStandingCommitteeonCommunicationsandtheArts–31March2017

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Introduction

TheAustralianWriters’Guild(AWG)protectsandpromoteswriter’srights–onscreen,on

stage and on air. On behalf of its members, the AWG works to improve professional

standards, conditions and remuneration, to protect and advance creative rights and to

promotetheAustralianculturalvoiceinallitsdiversity.

TheAWGappreciatestheHouseofRepresentativesStandingCommitteeon

CommunicationsandtheArts’interestintheAustralianfilmandtelevisionindustryandlook

forwardtoofferingourassistancewherepossible.

Duringyourinquiry,wewouldaskyoutoconsiderthefollowing:

1. preservingexistinglocalcontentquotasforscriptedtelevision;and

2. ensureanyfuturerefundoflicensingfeestothecommercialnetworkscomewithan

obligationtospenditonlocalscriptedcontent;and

3. introducingataxonnewstreamingservicestiedtolocalcontentquotasand

investmentinlocalscriptedtelevisionproduction;and

4. increasingtheproducer’soffsetfortelevisionfrom20%to40%;and

5. rejectingtheproposedamendmentstothecopyrightlawwhichthreatenthe

livelihoodsofAustralianwritersanddis-incetivizecreationandinnovation.

Wesincerelyhopethatthereisanappetiteforpositivechangewithinthiscurrent

governmentandthatthroughconsultationandcollaborationwecanworktowardsa

strongerandmoresustainablefilmandtelevisionindustryandallowallAustraliansengaged

inthefilmandtelevisionindustry(notjustproducerswhoarealreadywellsupportedby

ScreenAustraliaandthestatefundingbodies)tobettercompeteforinvestmentand

successontheglobalstage.

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Localcontentquotas

ScriptedDrama–tellingAustralianstories–isthemostexpensiveaudio-visualcontentto

producewithaveragebudgetsofAUD$1.1millionperhour,yetitisarguablythemost

importantcontenttosupportifwearetocompeteforinvestmentwithoverseasproducers

whohavethebenefitofamarketwhichsustainsitselfcommerciallywithlittletono

governmentinterventionandaccesstoproductionbudgets,populations,hundredsof

channelsandonlinestreamingservices,advancedtechnologyandinternetcapabilities

whichAustralianscanonlydreamof.

Thestarkrealityisthatwewillneverbecompetingonalevelplayingfieldcommercially

withtheinternationalEnglishlanguagecontentmarketwhichisdominatedbytheUnited

States.However,wecanregulateandlegislatetoensurethatAustralianstoriescontinueto

beapartoftheconversation.

Wecannotforgetthat,unlikethebehemothoftheUnitedStatesandmanyofourother

competitorsinthespace,theAustralianindustryisalsodrivenbyaculturalimperative

whichmustbeconsideredandsitabovemotivationsofmarketprotectionismorcommercial

considerationssuchasanincreasesinthelocationoffsetorPDVoffset,whichincentivise

ourcompetitorstocomehereandmaketheirstoriesattheexpenseofAustraliantaxpayers,

creativesandaudienceswhowilllosetheopportunitytoseethemselvesparticipateinthe

processandbereflectedonscreen.

ThereisnodoubtthattheAustralianpublicsupportstheexistingpolicyoflocalcontent

quotasbothasapolicyoptionandinitsviewinghabits.ScreenAustralia’s2016Screen

CurrencyReport(“theReport”)foundthatAustraliansexpressedapreferenceforAustralian

contentoverforeignscreencontent.Itwasfoundthatevenamongstthemostavidonline

viewers(whosubscribetostreamingserviceslikeNetflixandStan),Australiancontentwas

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favoured.Thishasbeenatrendformanyyearsnow,notwithstandingtheincreased

presenceofproviderswithhugeselectionsofAmerican,Britishandotherinternational

contentavailable.Withaudiencesmakingthischoice,itbecomesclearthatAustralians

placeanextremelyhighvalueonAustraliancontent.Australianshaveanappetiteforseeing

showscreatedinAustraliawhichreflecttheirexperienceoflivinginAustraliaandwhatit

meanstobeAustralian.Ifwecontinuetofeedthishunger,theindustrywillnotonlysurvive

butwillthrive.

TheAWGsubmitsthatcontentregulationintheformofenforceablelocalcontentquotas

forscriptedtelevisionisthecornerstonetopreservingqualityAustralianaudio-visual

contentonourscreens.Withoutsuchregulationtoachievetargetedoutcomes,itislikely

thatAustraliancontentwouldcompletelydisappearfromourscreens.

Itisawell-documentedfactthatAustralianbroadcastersandstreamingservicescanbuya

criticallyacclaimed,qualityscripteddramafromtheUnitedStatesthatcostAUD$6million

perhourforafractionofwhatthatshowcosttomakeandafractionofwhatitwouldcost

forthemtomakealocallyproducedscripteddrama.Inacommercialbroadcastcontext,it

wouldmakeabsolutelynosenseforabroadcastertospendoverAUD$13millionproducing

alocalscripteddramawhichwouldhavelittlesaleabilityoverseas,decliningadvertising

revenueandwouldbeunlikelytorecoupitscostsletaloneseeaprofit.

TheReportalsostatedthatallscreencontentunderAustraliancreativecontrolgenerated

AUD$2.6billionand20,158FTEjobs.Iflocalcontentquotasweretobereduced,thespace

these programs occupy in the market would inevitably be filled by cheaply purchased

internationalcontentoroffshoreproductionsattractedbythelocationorPDVoffsetwhich

maybringemploymentforsomeactors,directors,extras,crewandpostproductionpersonel

buthavenomandatoryrequirements toemployAustralianwritersorotherkeycreatives.

While this may have short term financial benefits for Australia’s commercial television

networks,longterm,thiswoulddecimatetheAustralianfilmandtelevisionindustry,havea

negativeimpactonemploymentandGDP.Theproductionspurchasedfromoverseaswould

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bemadebyforeignactors,writers,producers,directorsanddistributors,takingemployment

awayfromtheirAustraliancounterparts.Toaddsalttothewound,thoseseekingtoworkin

a thriving film and television industrywould be drawn away fromAustralian shores. This

wouldhaveanenormous impactonthe industryeconomically.Perhapsmoresignificantly

though,futuregenerationsofcreatorswillnothaveanindustryinwhichtoearntheirstripes.

Withoutthisinitialindustryexperience,itisunlikelytheywillbeabletogetmeaningfuljobs,

evenintheoffshorefilmandtelevisionindustries.

TherearealsosignificantfinancialbenefitsthatAustralianscriptedcontentbringstoother

Australian industrieswhichwould also be at risk if local content quotaswere relaxed or

removed.According to theReport, “Screen content attracts around230,000 international

touriststoAustraliaeachyear,drivinganestimated$725millionintourismexpenditure.”

TheAWGisalsoawarethatthefederalgovernmentrecentlyreturnedAUD$160millionin

licencefeestothecommercialnetworkswithoutimposinganyrequirementthattheyspend

thatmoneyonlocalscriptedcontent.TheAWGrecommendsthatanyfuturerefundtothe

commercialnetworkscomewithanobligationtospenditonlocalscriptedcontentto

ensurethatitdeliversonitsmandatetosupportthegrowthandsustainabilityofthescreen

industry.

TheAWGsupportsregulatoryparityfordigitalcontentthatisplatformneutral.Newforeign

entrantstothemarket,suchasNetflix,arenotboundbylocalcontentquotas.Theyenter

theAustralianmarketwithhugeexistingcontentlibraries,oftenacquiredcheaplyoratzero

marginalcost,inworldwidedistributiondeals.Asdiscussedabove,thereisnoeconomic

incentiveforthemtocommissionexpensivelocaltelevisiondramaortoacquireitnorare

theyoperatingonanyculturalimperativetocommissionoracquirethecontentofaforeign

country.Localnetworksandcontentprovidersareunderincreasedpressuretocompete

withtheseinternetstreamingserviceswhoarenotoperatingunderthesamerulesand

restrictionsastheyare.Apossiblesolutionthathasbeenproposedseveraltimesbyvarious

bodies,isthatinsteadofreducinglocalquotastodealwithinternationalstreaming

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competition,streamingservicesshouldhavesomelocalcontentrequirementsplacedon

them.Weunderstandthatthismayrequireagradualadditionofregulation,and

recommendthatmarketsharebeusedasaguideinintroducingregulationstoeach

platform.

Wewould also support the proposition that internet streaming services and newmarket

entrantsshouldbecompelledtoprovideagreatercontributiontotheAustralian filmand

televisionindustrythroughtheirtaxandGSTpaymentswhichcouldbeputtowardsfinancing

localproductionofscripteddramaandensurethattheindustrycouldcontinuetogrow.It

would also ensure streaming services make a contribution to the market that they are

currentlyexploitingandexploitingwellwitha2016reportfromRoyMorganstatingthatover

5millionAustraliansarenowsubscriberstoNetflixand891,000Australianssubscribingto

STAN.Withbaselevelsubscriptionscosting$8.99permonthand$10permonthrespectively

thereisasignificantrevenuebasetodrawfrom.

The AWG recommends: Preserving existing local content quotas for scripted television

acrossallgenres,ensuringanyfuturerefundoflicensingfeestothecommercialnetworks

comewithanobligationtospenditonlocalscriptedcontentandintroducingataxonnew

streamingservicestiedtolocalcontentquotasandinvestmentinlocalscriptedtelevision

production.

INCREASEPRODUCER’SOFFSETFORTELEVISION:

Underthecurrentsystem,Australianfeaturefilmsattractaproducer’soffsetof40%,which

isdoublewhatisofferedtoqualifyingtelevisionproductions.Weunderstandthisdisparity

wasoriginallyputinplacebecausethebudgetsforfeaturefilmwerecomparativelyhigher

thantelevisionandfeaturefilmfinanceharderforproducerstoraise.However,withcurrent

AustraliantelevisiondramabudgetssittingaroundAUD$1.1millionperhourandwithmany

seriesconsistingof6to12episodesperseasonthebudgetsarenowcomparable,andin

mostcases,exceedthebudgetsforAustralianfeaturefilms.

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Australiaisalsofacingintensecompetitionfortelevisionproductionsfromregional

neighbourssuchasNewZealandandMalaysiawhoeachhavea40%and30%offsetfor

televisionrespectively.ManylargeproductionsarenowchoosingtoshootinNewZealand

insteadofAustraliatotakeadvantageofthelargeroffsetandthisiscostingAustralians

opportunitiesforemployment,skilldevelopmentandcostingtheAustralianeconomy

moneyinlostrevenue.

Todate,weunderstandthattheproduceroffsethasbeenextremelyeffectiveindriving

high-quality,scripteddramaproductionwhichisindemandwithbothlocaland

internationalaudiencesand,withitsqualifyingrequirementsinsistingonthekeycreatives

suchaswritersbeingAustralian,ensuresprofessionalopportunitiesforAustralianwriters

andotherkeycreativesandguaranteesAustralianaudienceson-goingaccesstoAustralian

content.

ResearchbyPriceWaterhouseCoopers(“thePWCreport”)whichwascommissionedbythe

productionandpayTVindustriesestimatesthatoverAUD$100millionineconomicactivity

wouldbecreatediftheproducer’soffsetfortelevisionproductionwasdoubledandthatthe

costtothefederalgovernmentwouldonlybe"amaximumof$15.5millioninforegonetax

revenue."ThePWCreportestimatedthat360newtelevisionproductionjobswouldbe

createdandsaidAustralia'sinternationalcompetitivenessintheglobalscreenproduction

andfinanceindustrywouldbe"significantlyenhanced".

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TheAWGsupportstheincreaseintheproducer’soffsetfortelevisionoveranyincreasein

thelocationoffsetasthoseproductionsdonothavetosatisfythe"significantAustralian

contenttest"whichensuresthatAustralianstoriescancontinuetobetoldbyAustralian

writersforglobalaudiences.Thebeneficiariesofthelocationoffsetalsotendtobelarge,

wealthyUSproductioncompanieswhodon’tneedtheAustraliantaxpayerstopropthemup

andarenotcompelledto(anddonotchooseto)employasmanyAustraliansasproductions

compelledtomeetthesignificantAustraliancontenttestundertheproducer’soffsetfor

television.Further,thelocationoffsetonlyaddresseseconomicswhereasincreasingthe

producer’soffsetfortelevisionmeetseconomicandculturaldriversofgovernment

interventioninmarketsthatwouldotherwisebefree.

WhilstmanyofthefactorswhichmakeAustralianTVuncompetitiveinaglobalmarketare

beyondourcontroltherearemanysimplethingswecandowhichwilldramaticallyimprove

thequalityofourshowsandincreasethechancesofthembeingcriticallyandfinancially

successfulbothhereandabroad.

Ithaslongbeenestablishedthatthekeycontributingfactortothenewgoldenageof

televisionintheUnitedStates,whichismarkedbyqualityscripteddramareceivedwellby

criticsandaudiencesalike,isplacingcreativecontrolinthehandsofthewriter.Wehave

writersinAustraliawhohavedemonstrated,againstallodds,thattheycancompetewith

USwriterscreatingqualitycontentandfindingaudienceshereandoverseasfortheshows

thattheyhavecreated.RecentsuccessstoriessuchasPleaseLikeMe,TheCode,TheSlap

andRakeshowthatAustralianstoriesmatterandarecapableofcompetingwithforeign

projectsforinternationalinvestment.Increasingtheproducersoffsetfortelevisionand

insistingthatAustraliancontentmeetthesignificantAustraliancontenttestsensuresthat

thesewriterscankeepwritingqualityscriptsandcreatingAustraliancontentintothe

future.Thisisoneofthecheapestchangeswecanmakeanditwillhaveahugepositive

impact.

AWGrecommendation:Increasetheproducer’soffsetfortelevisionto40%

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CopyrightLaw

Forthefilmandtelevision industrytobesustainable, theremustbeasteadyandreliable

streamofincomeforcreators.Thisincomeenablescreatorstocontinuetoworkinthisoften

unpredictable industry. For creators, and writers in particular, royalties for use of their

copyrightmaterialmakeupasignificantportionofthissteadyandsustainable income.To

guaranteethefuturegrowthandsustainabilityoftheindustry,revenuestreamslikethismust

besafeguarded.

TheProductivityCommission recentlyproposedchanges to the intellectualproperty laws.

Theserecommendations, ifmade into law,wouldweaken intellectualproperty lawto the

pointofobscurity.TheproposedchangeswouldforcesmallAustraliancreativeindustriesto

competewithmammothglobal“tech”companies,whichwouldhaveshatteringeffectsofthe

Australianfilmandtelevisionindustry.Remunerationwouldgooffshore,insteadofintothe

handsofthosecreatingcontent.Suchchangeswouldallowcontenttobesharedonlinemore

easily,thetermofcopyrighttobeshorteneddramaticallyandinternationaldistributorscould

more easily exploit the Australianmarket for selfish, economic gain. These proposals for

intellectualpropertyandcopyrightlawwouldhaveastiflingeffectontheAustralianfilmand

televisionindustry.Withoutadequateremuneration,thereisnoincentivetocreateandthe

industrycannotfunctionanditcertainlycannotgrow.

Specifically, writingwould become a hobby instead of a legitimate profession of craft as

writerswouldnotbeabletosupportthemselveswhilsttheywritetheAustralianstoriesthat

havebecomesoentrenchedinourculture.KathandKim,SummerHeightsHigh,PleaseLike

Me, The Code, Rake, Shine, The Sapphires, The Castle, Priscilla: Queen of the Desert and

Muriel’sWeddingexistbecauseofthesafeguardsprotectingtheAustralianfilmandtelevision

industry,likecopyrightprotectionandfairremuneration.

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Additionally,the“fairuse”proposalputforwardbytheProductivityCommissionislikelyto

increasetheneedforcontentcreatorsandownerstolitigate.Thisisbecausethecourtwill

need to testwhatconstitutesa“fairuse”ofwork,onceanactionhasbeenbroughtbya

copyrightowner.TheAWGopposesanyrecommendationsthatwouldputsuchaburdenon

its members. Litigations would take a significant emotional and financial toll on writers.

Furthermore, fewpeoplehave thenecessary resources to sustaina litigation,especiallya

litigation against multi-billion dollar multi-national companies and especially Australian

writerswhoseaverageincomeislessthanAUD$40,000perannum.

In this timeofNetflix, Stan,YouTube,Google, Spotify, SoundCloudandamyriadofother

online content providers, the AWG sees a sustainable industry coming from increased

copyrightprotectionsandnotthereverse.

Copyright reform would be welcomed if it could play a meaningful role in ensuring fair

remuneration for copyright creators andwithstand today’s changing intellectual property

landscape.ImprovingintellectualpropertylawinAustraliawouldattractcreativeindustries,

innovativethinking,andcreatejobs.Thiswouldhaveasignificantsocialandeconomicbenefit

andwouldensureAustralianvoicescontinue tobeheard inAustraliaand throughout the

world.

AWG recommendation: reject the proposed amendments to the copyright law which

threatenthelivelihoodsofAustralianwritersanddis-incetivizecreationandinnovation.

Yourssincerely,

WendyHowell

Manager,IndustrialAffairs

AustralianWriters’Guild