Lush House – cleaning up the doco scene

UPDATE 10 MAY 2012: The 2012/13 Budget Paper No 2 states "The Government will insert a definition of documentary, and related terms, into the legislation governing the producer offset. It will apply to films where principal photography commences on or after 1 July 2012." 


The change to the definition will impact on the following discussion of the Lush House litigation.


What qualifies as a ‘documentary’ program under the Producer Offset legislation is getting attention in the argument as to whether the television series Lush House is a ‘documentary’ series that qualifies for the 20% Producer Offset.[1]  That a documentary as ‘a creative treatment of actuality’ is a definition attributed to John Grierson, which has been applied by the Australian Communications and Media Authority (ACMA)  for the purposes of determining what is ‘Australian content’ under the Broadcasting Services Act 1992 (Cth).  On 24 June 2011 the Administrative Appeals Tribunal of Australia (AATA) delivered the Lush House decision on whether that television series, staring the domestic goddess Shannon Lush - Australia's cleaning and home hints guru - is a ‘documentary’ series that qualifies for the 20% Producer Offset under s. 376 of the Income Tax Assessment Act 1997 (Cth) (the ITAA).

The AATA started with a statement that “the characteristics of a documentary program is the presentation of factual events; with the object of recording or “documenting” those factual events; with the purpose of the recording being to “inform or educate”. A documentary program is understood to be a “creative treatment” of factual events, with that creativity being evident in the commentary or editing of the factual material.”[2]

The AATA then provided a definition that describes a documentary as being “a creative recording of facts for the purpose of informing or educating” which is “not frivolous”.[3] 

What is a frivolous program?

The AATA go on to describe a spectrum from programs that inform or educate (the serious end of the scale) to those that do not inform or educate (the ‘frivolous’ end of this imaginary spectrum); [4] however the approach of the AATA fails to provide a bright line test to the boundary between the two.  The importance of the boundary is a ‘documentary’ qualifies for Producer Offset funding, but something that is not a ‘documentary’ is ineligible.

If the determination of ineligibility is something that is a ‘frivolous’ program - how do you know when you are looking at one?  For example, is a program like ‘Bush Mechanics’ (2001, Warlipri Media Association/AFC) excluded because it “marked by unbecoming levity” (as the Merriam Webster dictionary would define frivolous), in the humour apparent in the solutions presented to dealing with a flat tyre on the notorious Tanami Track. 

The AATA consider that documentary must be a ‘serious’ approach to informing and educating, however the AATA accept that a documentary may use humour, but not so as to compromise the serious purpose of informing or educating. ‘Bush Mechanics’ would therefore appear to be an eligible documentary. But this example suggests that ‘frivolous’ has no real meaning as a criterion to determine what is an eligible documentary program. What the AATA propose seems ambiguous or obscure in the false dichotomy it creates between informing and educating and contrasting that with the absence of any serious purpose or value, using the concept of something being frivolous. The AATA test of a program that is ‘frivolous’ as being outside what is understood to a documentary program is ultimately a circular definition.

Category based analysis versus a statement of criteria or indicia

The decision of the ATTA provides a statement of criteria or indicia of a documentary program – rather than a category based analysis - to determine whether factual programming should qualifying for the 20% Producer Offset under s. 376 ITAA; however Screen Australia have subsequently announced that it has filed an appeal in the Federal Court of Australia.

The AATA stated that it is error in reasoning to adopt an approach of attempting to place a program in a category; such as considering whether the material is a ‘how to program, a ‘makeover program, or a ‘renovation program’ (or some other category of programming, such as those listed in the definition) and from that conclusion determine whether the material is a documentary. [5] [21]  I suspect the appeal of Screen Australian will give attention to that proposition as being an error of reasoning.

UPDATE 7 MARCH 2012: The decision of the Full Federal Court was that there was no error in the approach taken by the AATA to interpreted what is meant by a “documentary”; the judges of Full Federal Court took the view it was unnecessary to express their views of the meaning of the word “documentary”.

Screen Australia had previously refused to certify the Lush House television series as qualifying for the 20% Producer Offset. Screen Australia made the decision that the television series Lush House was ineligible because the series fell into the excluded category of ‘infotainment’ in the definition applied in Screen Australia’s Guidelines,  ‘Producer Offset for Screen Production inAustralia: Guidelines’:

“Documentary program means a program that is a creative treatment of actuality other than a news, current affairs, sports coverage, magazine, infotainment or light entertainment program.”[6]

The AATA identified a problem with this definition is the uncertainty as to what material is ‘infotainment’.  The AATA was of the opinion that the distinction between ‘documentary’ and ‘infotainment’ drawn in the definition might have been intended to emphasise the fact that documentaries will be at the informative or serious end of the scale.[7] That is, there is a possible spectrum of programming, with a dividing line between ‘documentary’ programming (that is eligible for Producer Offset certification) and programming that is not eligible for Producer Offset certification, such as “[i]f the program had had no, or very little, informative content”. [8]

Docu-drama

The AATA considered what is the impact of the events recorded being contrived, in that some of the activities recorded are directed by the makers of the program. The AATA identify the existence of contrivance of events in the program as not necessarily preventing a program from being a documentary unless “they are so extensive as to destroy the ability to describe the activity being filmed as genuine activity.  The households in Lush House were not acting.  Their lives really did involve the activities filmed, even if they were suggested by the film’s producers.” [9]  Again the AATA describe a spectrum of programming from those that contain some elements of contrivance in how the events in reality television develop during the program to the introduction of a completely artificial situation.[10]

Eligibility for the 20% Producer Offset under s. 376 ITAA

The federal budget of May 2011 provided for a lower eligibility threshold for television productions. The Explanatory Memorandum for the necessary changes to the ITAA states that “A company eligible for the producer offset for a documentary must meet minimum expenditure thresholds of $500,000 and $250,000 per hour.”[11]

The appeal to the Federal Court should clarify how ‘documentary’ should be defined so as to determine who programs qualify for taxpayer funding under s. 376 ITAA  and what is excluded from eligibility.  Of course if Screen Australia does not win the appeal. The federal government can always legislated to redefine eligibility  for ‘documentary’ programming if the treasury department wants to control the level of taxpayer funding that is approved by the Producer Offset Unit (POU) of Screen Australia.

UPDATE 7 MARCH 2012: The decision of the Full Federal Court was that there was no error in the approach taken by the AATA to interpreted what is meant by a “documentary”; the judges of Full Federal Court took the view it was unnecessary to express their views of the meaning of the word “documentary”.

Producer Equity Program

Screen Australia’s ‘Producer EquityProgram’ provides a direct payment of funds to producers of ‘eligible low-budget Australian documentaries’ equal to 20 per cent of the approved budget. Eligibility is tied the ACMA guidelines that were pulled apart by the AATA in the Lush House decision.  However Screen Australia may well be able to maintain the integrity of the Producer Equity Program, as these funds for low-budget docos would appear to be part of the budget allocation to Screen Australia; that is, the funds are not part of producer offset funding under s. 376 ITAA - the effect of the AATA Lush House decision only relates to how ‘documentary’ should be defined in relation to producer offset funding under s. 376 ITAA .

---

[1] EME Productions No. 1 Pty Ltd and Screen Australia [2011] AATA 439 (24 June 2011)

[2] EME Productions No. 1, [13].

[3] EME Productions No. 1, [15].

[4] EME Productions No. 1, [14-15 & 24].

[5] EME Productions No. 1, [21].

[6] EME Productions No. 1, [27].

[7] EME Productions No. 1, [34].

[8] EME Productions No. 1, [35].

[9] EME Productions No. 1, [19].

[10] EME Productions No. 1, [26].

[11] Explanatory Memorandum [9.31 & 9.48]

Significant Australian Content assessment by Screen Australia

What is an Aussie film, in terms of financing production, is determined by whether the film has “significant Australian content”. The ‘producer offset’ provide film and television production incentives for Australian producers are a key element in pulling together financing for film and television productions. Qualifying productions are eligible for 40% producer offset payments from the Australian Tax Office (ATO) in respect of feature films that are to be released in cinemas; with 20% producer offset payments in respect to other qualifying productions. There have been films that have been refused producer offset status because they have been assessed as not having sufficient Australian content, such as George Miller's ‘Justice League Mortal’ project in 2008; more recently the Beyond Productions ‘Taboo’ documentary series was refused producer offset status.

Some projects will be at the edge of the envelope as to whether the film “has a significant Australian content” as required under requirement under s 376-65(2) of the Income Tax Assessment Act 1997 (Cth) (the ITAA). This requirement was reviewed by the Administrative Appeals Tribunal of Australia (ATTA) in proceedings between Beyond Productions Pty Ltd and Screen Australia. In that matter Screen Australia had determined that series 4 & 5 of a factual series titled ‘Taboo’, that Beyond produced for the National Geographic Channel, did not have significant Australian content; and that series 4 & 5 of ‘Taboo’ was not “a new creative concept” (s 376-65(5)) ITAA.

As Beyond came into the production of ‘Taboo’ at series 4 & 5, the production of the ‘Taboo’ series was outside what may be the usual project development path of Australian producers.  Therefore rather than discussing the specific arguments put before the ATTA as to why the ‘Taboo’ series should have been accepted as having “significant Australian content”, a more generic discussion on that requirement follows.

Section 376-70 (1) sets out the factors to which regard must be had in determining whether a film has a significant Australian content:

(a)  the subject matter of the film;

(b)  the place where the film was made;

(c)  the nationalities and places of residence of the persons who took part in the making of the film;

(d)  the details of the production expenditure incurred in respect of the film;

(e)  any other matters that the film authority considers to be relevant.

The subject matter of the film

·         The ATTA gave general support to the approach taken in Screen Australia’s guidelines where they interpret the ‘subject matter of the film’ as requiring Screen Australia to consider the ‘look and feel of the film’ and determine whether the film is sufficiently Australian or has a significant creative connection with Australia.[1]  This approach was consistent with an earlier decision of McVeigh v Willara Pty Ltd – the ‘Captain Invincible’ case – in which the Full Federal Court stated that:

“ "the subject matter of the film" are ordinary English words. They have no technical connotation and entitle, indeed require, … regard to such matters as the setting of the film, whether it purports to tell a story about Australians, whether there is some quality about the film that marks it out as an Australian film. This does not mean that only a film such as Jedda or Gallipoli may be said to have a significant Australian content.”[2]

·         Even if the subject matter is international rather than set in Australia or involving identifiable Australian characters, the “subject matter” of a film can still be said to have “significant Australian content”, as described by the ATTA, if there is a “discernible Australian point of view or sensibility that the ordinary viewer would recognise as Australian”. The ‘Captain Invincible’ case referred to where “the subject matter of the film is universal but that it reflects a cultural background peculiar to Australia” which may “warrant a decision that the film has a significant Australian content, notwithstanding that its subject matter has no particularly Australian quality.” [3]

The relative importance of the factors in subparagraphs (a) to (e)

·         As to the relative importance of the factors in subparagraphs (a) to (e), the ATTA identified from the Captain Invincible’ case the necessary approach of reviewing each element “individually and cumulatively, is to determine whether they demonstrate significant Australian content.”[4]  The ATTA rejected an argument that subparagraphs (b) to (d) can also be considered in relation to subparagraph (a) subject matter; that is, strong Australian elements relevant to subparagraphs (b) to (d) do not add weight to the ‘subject matter’ elements relevant to subparagraph (a).

·         The review of each factor cannot be described as an exercise in attributing value (either positive or negative) when assessing each factors (such as in a points based assessment).  That is, undue emphasis should not be given to non-Australian elements.[5]  The ATTA identified the correct approach as following from “the focus of s 376-70(1), which is whether a film has a significant Australian content” and that the decision maker “must be satisfied, having had regard to the matters specified in paragraphs (a) to (e), “whether there are aspects of the film which give it a content which is significantly Australian”.[6]

The Beyond decision discounts the significance of applications for producer offset status referring to other projects as have been granted producer offset status, as the ATTA stated that “s 376-70 requires that each application must be individually assessed with reference to the specified criteria.  The outcome of other applications is not, therefore, a relevant matter in making this determination.”[7]  The consequence of this approach is that the focus is on the elements of the project and the extent to which those elements advance the argument that the project has “significant Australian content”.

In separate proceedings before the ATTA involving an Essential Media project, the ATTA took the view that considering how other projects have been assessed by Screen Australia cannot influence the central question in that matter (which is still to be determined by the ATTA) whether the Essential Media project was a ‘documentary’ that is eligible for producer offset status or whether the project is ineligible because fall into the excluded category of ‘infotainment’.[8] [UPDATE: see Lush House - cleaning up the doco scene]

A ‘new creative concept’ (s. 376-70 ITAA)

The ATTA decision in the Beyond matter provides guidance as to what is meant by the words ‘a new creative concept’. The view of the ATTA is that this phrase implies “more than mere difference and ….more than a different treatment of the subject matter, even if the treatment of a subject is an important matter.  The words suggest an idea or design for the film in question that involves some originality in how the subject matter is addressed.”[9]

Early focus on the question whether a film has “significant Australian content”

The eligibility of a proposed feature film or television production for producer offset production finance needs to be considered at the time the underlying rights are acquired and co-production contracts are put in place so that these arrangements provide strong arguments to support the application to the producer offset and co-production division of Screen Australia for the necessary producer offset certificate. 

UPDATE

On 7 September 2011 Screen Australia announced that following a confidential agreement, Beyond Productions had discontinued its appeal in relation to the AATA decision with respect to the television series ‘Taboo’.

---

[1] Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 (31 January 2011) [18] & [28].

[2] McVeigh v Willara Pty Ltd [1984] FCA 379 (the Captain Invincible case); (1984) 6 FCR 587 at 597.

[3] The Captain Invincible case (1984) 6 FCR 587 at 597.

[4] Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 [29].

[5] Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 [27].

[6] Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 [66]. Referring to the Captain Invincible case at 596.

[7] Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 [60].

[8] EME Productions No 1 Pty Ltd and Screen Australia [2010] AATA 839 (28 October 2010) 

[9] Beyond Productions Pty Ltd and Screen Australia [2011] AATA 39 [71].