Australia has lost a $200 million film by the makers of The Matrix movies, which would have employed 2000 people, because the Federal Government so far refuses to increase its location offset rebate beyond a one-off boost to The Wolverine.
Instead, the producer-director Wachowski siblings have taken their sci-film Jupiter Ascending, starring Channing Tatum and Mila Kunis, which would have been made entirely in Sydney, to the United Kingdom, having been dissuaded from producing the film in Australia because of the high value of the dollar.
Another film mooted for Sydney's Fox Studios in 2013, Disney's 20,000 Leagues Under The Sea: Captain Nemo, directed by Oscar-nominated David Fincher and possibly to star Brad Pitt, hangs in the balance.
There was now no international feature-film scheduled for Australia over the next 12 months, warned the Media, Entertainment and Arts Alliance's director of entertainment and crew, Mal Tulloch.
"The one-off funding for The Wolverine gave the Federal Government a lot of good publicity," Tulloch said. "Now it's time to put up or shut up."
In April, the Australian film industry welcomed an announcement by the Federal Government of a $12.8 million one-off investment in The Wolverine – the equivalent of boosting the usual 16.5 per cent location offset to 30 per cent, taking the total Australian taxpayer largesse for the Hugh Jackman fantasy film to more than $25 million.
The federal Arts Minister, Simon Crean, told Fairfax Media earlier this month he would take a proposal to federal Cabinet to more broadly apply a 30 per cent location offset - the rebate on the Australian spend of large-budget productions that do not satisfy the Australian content test for the producer offset.
But the federal Treasurer, Wayne Swan, who visited The Wolverine set on Friday, has been non-committal on widening the offset as the government heads towards an election projecting a surplus. One source said: "He didn't stay long."
The deputy chair of the Ausfilm Board, Catherine McDonnell, said given a location offset of 16.5 per cent, "Australia is not even considered" as a location by many international filmmakers.
"We're not financially attractive enough," she said. "At 30 per cent, at least we could compete."
Industry sources said the Wachowski movie lost to Australia two months ago came from Warner Brothers – which has produced many films here in previous years – and was to be produced here by Australian industry veteran Grant Hill.
One source said: "It would have been bigger than The Wolverine; 2000 people – it was almost a $200 million film. But the government didn't react quick enough or wasn't interested in extending the one-off, so the film's gone".
It is believed, however, that producer-directors Andy and Lana (formerly Laurence) Wachowski only waited a matter of weeks for the Federal Government to give them an answer on increasing the location offset.
Tulloch said that without widening the 30 per cent offset across the industry for international films made here, there would be a "huge employment problem" when filming on The Wolverine finished at the end of this year and Australian crew returned from making Mad Max: Fury Road in Namibia.
"There will be enormous pressure to find employment for these people," Tulloch said.
Mr Crean was unavailable for comment.