VSTA - Victorian Screen Technician’s Association

VSTA Response to the Robert Con

10th Nov 08

THE VICTORIAN SCREEN TECHNICIANS ASSOCIATION'S RESPONSE TO
ROBERT CONNOLLY'S PAPER ON THE AUSTRALIAN FILM INDUSTRY

Robert Connolly's paper on a new methodology for feature film production makes
interesting reading. In it he makes some valid points and suggestions on the future of our industry.

The paper looks at 10 key issues that affect the way our industry works.

1. Perverse incentives
2. Income models
3. Wages
4. The danger of percentages
5. Unrealistic budgets, budget templates and inflexibility
6. Cast fees
7. The role of the completion guarantor and insurance
8. Reporting
9. Legals
10. Delivery

These issues are things we should have an understanding of and what effect they have on the crew side of the business.

The paper looks at the industry from the producer's point of view and a more sustainable business model driven by lower cost of production and tighter turnaround between productions and a share of gross revenues for the producer.

  We often bemoan producers for trying to hire crew for less money than what we feel we should get, but producing is a difficult job and trying to raise enough money for a
production is a real challenge. The reality is that for our industry to survive and prosper
we need our producers to make a reasonable living so as they can continue to bring
productions on stream for us to work on.

The traditional way to budget a film involves getting a production manager to budget the finished script then trying to fund the film at that budget. The expectations of writers, directors and producers are often beyond the limits of financing. What person would envisage a $100,000 renovation of a house and expect to only pay $10,000 for it. Budgets for films and television never seem adequate for the work and equipment needed.

This often sees the project budgeted at levels that exceed the possible financing. Robert Connolly's suggestion is to take the developed screenplay then budget it at a level that could realistically be financed.
Certainly the way our films are funded and the return they offer is not perfect. As Robert Connolly points out, for every $15.00 taken at the box office around $10.00 is retained by the exhibitor and $5.00 flows to the distributor. The distributor deducts a 25-30 per cent commission after taking out marketing costs. The remainder makes its way back to the investors who need to recoup their full equity before any money makes it to the creatives behind the film.

Unlike other industries where you can lift the selling price of a product to make a profit
the film industry makes a product, hopes it can sell it, doesn't know the selling price or
how much it will get back.

Other industries also create products that people want. For us it is all about bums on seats and mostly the public like to see films that are often canned by the critics. We have to be able to make films that appeal to a broad market. Of course not every film will do that but if we want to broaden our funding possibilities we have to prove to potential investors we can make films that have a market. Art house can be wonderful but after a while the sums don't add up. We can have all types of films but we must remember that this is a business.

For films that have some level government funding the producer's fee is around 3 per
cent of the budget. This translates to $30,000 dollars for a $1,000,000 production or
$150,000 for a $5,000,000 production. Robert points out that the work load is often the same regardless of the budget and that $30,000 is not enough to sustain an ongoing office and staff. One of his suggestions is to allow producers to have an equity stake in the production that would allow them to share in the profit of a production in lieu of a realistic fee.

His paper sets out other avenues producers can take to get more out of the productions they are working on. All this is important stuff, and we are certainly qualified to comment on all matters raised in his report, but like producers, we are also concerned on how we can have sustainable careers in our industry. Of all of the issues that Robert Connolly has raised, as crew members and members of VSTA, it is the wages side that most affects us.

One of his suggestions is to use more flexible budget models for low budget films which
would strive for lower production inputs. Technology is forever changing the way films
are being made. This technology, particularly the use of HD cameras, and visual effects
becoming more affordable has made some parts of filmmaking cheaper. Of course the
hiring of cast and crew remains a major cost of any film.

Considering the insurances, availability and quality of the workforce the fees charged by most freelancers could never be considered expensive. With wages being such a large portion of a production budget they are often seen as a likely candidate for reduction. Mining workers don't take a pay cut with a profit share incentive to help out some of our large mining companies in the hope the project will pay off

The company takes the risk after careful consideration and planning to generate the best chance of success. Projects are budgeted realistically to cover all contingencies. If the numbers do not add up the project does not go ahead until it is financially viable.

We know our films do not have the resources of these large companies but a lot of our
problems seem to arise from the projects that are chosen and with inappropriate
budgeting and script planning. If we are talking about pay flexibility and profit sharing
we should also be taking action on the planning front with writers, directors and
producers understanding lot more about budget basics and taking responsibility for
educating their finance sources about those basics and develop an acceptance that they may have to do with out the script or project elements they cannot afford.

Robert Connolly puts forward methods of crew payments that would include a
combination of award minimums and a meaningful share of a film's income. He argues
that smaller crew structures and an innovative approach to production can allow
equivalent wage structures to larger films and longer periods of work. It is not clear what he means by innovative approach, perhaps it may be a term for multi tasking.
It is an interesting argument but one that would need fleshing out. As any freelance crew member would tell you, to only work for award wages would mean a substantial cut in income. Topping up that wage with a share of the film's box office is a way of increasing the total financial package but as stated before, we are dealing with a product in which we don't know the ultimate selling price or how much it will return. Having as much as five per cent share of a film's profit is no good if it doesn't make a profit. Deferrals, with their restrictions, have not proven to be a great system for either party.

Just as a producer's workload is the same regardless of the budget, the same can be saidof the crew. In fact the work load is often greater because of the reduced size of each department and equipment restrictions. If it is a producers contention that they should be able to access some of the first dollar returns, then crew should be able to contend that if they accept a lower wage for working on a production with a share of box office to make up the difference on the normal rate then some sort of guarantee to that share should be in place.

If we are to entertain the idea of creating a new model of funding and new work
methodologies for lower budget films we need to make sure that this does not mean less overall remuneration for crews. Most freelancers have worked on projects for less money than usual but to do this on an ongoing basis would not be financially viable.

Award payments are often cited as the base for low budget productions as it gives crew a certainty of wage level. The problem is that the award has not kept pace with the level of wages that is standard on normal productions. Even the highest level covered by the MEAA award is well below commonly paid wages. The award is a necessary safety net but it should better reflect what the market normally pays.

A department of Industry and Innovation and Regional Development report reveals ABS figures that state industry wages fell by around 10% in the years 2006-2006 and salaries were below the average weekly earnings for the economy as a whole. With wages accounting for between 40-60 per cent of a production's budget it seems that it is the crew that is bearing a lot of the cost cutting in low budget films. This is hardly an
incentive to keep people in the industry. We are realistic enough to know that the award will probably never reflect true market rates, but there needs to be serious discussion amongst all interested parties about an increase and to what level.

Putting the award aside, any crew member who has been in the industry for a few years will tell you that the rates they are getting now are what they were getting years ago. It is easy to see why our remuneration is down by 10 percent. If we take inflation into account the wage reduction is far greater.

The Federal Government has in place legislation to protect workers entitlements called
the General Employee Entitlement Scheme (GEERS). This scheme makes sure that
employees of failed businesses get the superannuation and leave they are entitled to when a business fails.

To help with fair payment for work on lower budget films we could introduce a system where crew can have access to a similar fund. It would be necessary for crew members to work out a total fee that would be acceptable to both themselves and the producer. Usingthis fee as the basis, crew members could divide that fee into a wage portion and a deferred portion which would come out of the box office for the film. This deferral may even involve an on going share of the box office above the total fee they have agreed to.

If after a prescribed period the film has not made enough money to pay deferrals, the shortfall could come from this fund. Crew members could nominate to take the money owing to them up to the amount of their agreed fee from this fund or wait and get payments from the released film if they feel that it is going to be successful. Overtime and loadings etc would also be factored into the total money owing to the crew member. A loading of say 5% could be added to the total package because of the delay in receiving the final remuneration.

This scheme is a possible option for low budget productions and obviously funding of it a matter that would have to be worked out. Many countries have schemes where
governments grant funds to producers according to how many local viewers see their
films. A variation of such a system could fund this scheme e.g. $2.00 per ticket sold in
Australia. Perhaps it could come from a share of box office. It makes sense for producers to have access to first dollar returns and perhaps a portion of first dollar returns could be directed to this fund.

This is just one idea and film crew personnel need to be involved in developing ideas and ways of working that allow films to be created with budgets that can actually be financed. Crews have to go beyond just accepting any new work methods and structures that are imposed on them. We must be able to have our say on how changes affect us and have suggestions that can help. This is our industry too and the VSTA wants to do its bit to make it prosper.

Robert Connelly has produced a thought provoking paper with the basic tenant that we
have to produce innovative films with budgets that allow them to make a profit at the box office. Of course for the industry to thrive we need to produce films in all budget ranges, but they must aim to make a return or we may find eventually we have no industry at all. In the end this whole discussion is about sustainability and that means for both producers and crews.

Lex Martin - VSTA Vice President

Copy of Robert Connelly's White Paper

goto: http://www.vsta.com.au/forum/viewtopic.php?f=2&t=61