Fri, May 17, 2002 page19

• Moviemakers find lower costs Down Under

  • BLOOMBERG
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  For George Lucas, whose Star Wars: Episode II -- Attack of the Clones opened worldwide yesterday, filming it in Sydney was a no-brainer: English is widely spoken, most workers weren't unionized and costs were a third less than in the US.

  Lucas filmed 80 percent of the movie at News Corp's Fox Studios and will film the next Star Wars film there too, next year.

  

  Fans dressed as a Jedi and storm troopers in Las Vegas attend the debut of the latest Star Wars installment.

  PHOTO: AP

  It was part of the US$100 million that Hollywood spent in Australia last year, double the previous year.

  "We came here primarily because of the talent base," Star Wars producer Rick McCallum told the Sydney Morning Herald. In addition, "It's much cheaper than anywhere else in the English-speaking world."

  US workers are crying foul, saying they shouldn't be penalized for a strong US dollar that inflated costs at home and Australian tax breaks that proved hard for moviemakers to resist.

  All five of this year's nominees for the Best Picture Oscar were filmed outside California, including The Lord of the Rings in New Zealand and Moulin Rouge in Australia.

  The number of Hollywood-funded films shot overseas rose 53 percent between 1996 and 2001, leading to a loss of US$23 million in contributions to pension and health plans, said Ilyanne Kichaven, a spokeswoman for the Los Angeles-based Screen Actors Guild.

  Losses may swell to US$36 million by 2007, she said.

  A new union rule requires its 98,000 members to refuse work in foreign countries that don't comply with its pay rates or work conditions. Rule-breakers face fines, suspension or expulsion.

  "We recognize that production is going to be done in other countries, but wherever our members work we want their SAG contract to follow," Kichaven said.

  Though the union says the rule will add at most 3 percent to a US film's budget, Australian filmmakers say it will force up costs for locally financed movies that use domestic actors. Since most local films have budgets of less than US$3 million, a US-style salary would erode profit margins, said Geoff Brown, executive director of the Screen Producers Association of Australia.

  "It would mean if we wanted to cast Geoffrey Rush, Cate Blanchett, Rachel Griffiths or Hugh Jackman in a film, fully financed and produced by Australians, we have to pay that actor on a Hollywood scale," Brown said.

  At the same time, though, filmmakers boosted production spending 6 percent last year to A$608 million (US$333 million), the Australian Film Commission says. A quarter of that came from countries like the largest movie maker India, which produced more than 40 films, TV ads and music videos in Australia since 1998.

  Fox isn't alone. Village Roadshow Ltd, Australia's largest cinema operator, has a joint venture with AOL Time Warner Inc to produce films. The venture's most successful movie The Matrix, which had sales of US$450 million, was filmed in Sydney.

  Melbourne-based Village is encouraging its partner to shoot more films and increase its post-production work in Australia, where it has a studio in Queensland state. Four US movies with budgets bigger than US$25 million each are slated to shoot in Queensland this year, according to Variety.

  Aiming to make Melbourne more competitive, the Victorian state government last year allocated A$40 million to build six sound stages in the inner-city docklands, which are due to open next year.

  More producers will be attracted by Australia's 12.5 percent tax rebate for foreign filmmakers, said Fox Studios Australia Chief Executive Michael Harvey. The rebate will allow Australia to compete with rivals Canada, the UK, Ireland and the Czech Republic for more US productions, filmmakers say.

  New rules introduced last September will let foreigners claim the rebate if 70 percent of a film budgeted between US$8 million and US$27 million is spent in Australia. With a larger budget, filmmakers can claim the rebate no matter how much they spend in Australia.

  "We have the talent, financially it's a good place to shoot and now there's an additional incentive," Harvey said.
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