Games industry: Not happy, Jan

James Riley
Editorial Director

The federal government has rejected nearly all the recommendations of a Senate inquiry into the local games development sector, leaving the industry “incredibly disappointed” and angry.

The government tabled its response to the Environment and Communications Reference Committee’s report on the video game development industry late on Wednesday afternoon, nearly two years after it was received.

It had previously missed its own deadline to table the report by the end of last year, and has done so now more than 600 days after the committee delivered its recommendations.

Mitch Fifield: Led the ‘disappointing’ government response to the games inquiry

The committee had recommended that the government restore a $20 million games development fund, introduce refundable tax offsets, provide financial support to co-working spaces, and to commit to a “21st century broadband network”.

In its long-awaited response, the government either “noted” or rejected all of these recommendations, only “supporting in principle” the concept of supporting more serious games, but saying this would be led by the industry itself.

The government mostly pointed to existing initiatives included in the National Innovation and Science Agenda as to why it was rejecting all of the recommendations specific to the games development industry.

The delayed response is a huge blow for the local sector, Interactive Games and Entertainment Association chief executive Ron Curry said.

“To say we are disappointed with the government’s response to the senate inquiry would be to understate things. We are incredibly disappointed for the industry, but sadly not surprised, by this short-sighted approach by the federal government,” Mr Curry said.

“The lack of engagement and long overdue reply spoke volumes even before we saw the “all of government” response. The industry deserves much better than this.”

The opposition has also slammed the government attitude to the sector.

“It has taken the Turnbull Government so long to say so little. After waiting 643 days, this paltry response is a massive disappointment for the game development industry. [They] deserve so much better,” Shadow communications minister Michelle Rowland said.

In its response, the government acknowledged the growth and importance of the Australian games development sector.

“The Australian government’s vision for the future is a strong, dynamic and digitally sophisticated economy. The games development industry is inherently innovative and entrepreneurial, and can be a strong contributor to Australia’s knowledge economy,” the government said in its response.

The key recommendation from the inquiry was for the government to reinstate the $20 million games development fund, which was axed in the 2014 budget. The government “noted” this recommendation, and referred to funding on offer through the National Innovation and Science Agenda and state government policies.

“NISA includes measures that are available for certain kinds of business models within the games industry,” it said.

“The government will continue to explore mechanisms that will assist games businesses and demonstrate to the private sector the potential of this sector to drive innovation. State and territory governments also offer a range of funding and other incentives that support interactive games businesses in their jurisdictions.”

The government flat out rejected the recommendation to introduce a refundable tax offset for Australian expenditure in the development of games, again pointing to measures aimed at startups in NISA.

“Government may be best placed to support industry through broader initiatives designed to improve the general regulatory and cultural environment for innovation and therefore promote jobs and growth in the sector, rather than through an industry specific tax offset,” the response said.

The government also said it does not support the recommendation that it consider the tax implication of crowdsourced funding for startups and whether temporary tax relief should be offered for income gained from crowdsourced funding.

It said that the NISA tax incentives were adequate to address this and that equity crowdfunding is also another funding option.

Equity crowdfunding is still only available to public companies in Australia, and legislation to extend it to private companies is languishing in Parliament.

It noted the recommendation to provide funding to games-focused co-working spaces and to investigate the viability of establishing an innovation hub in a regional area, saying that capital is already provided through the Incubator Support initiative, and that responsibility was on state governments to build hubs.

“Operating in a complex environment, access to interconnected resources and capabilities can increase the strength of the creative industries’ often small and independent businesses.

“State governments are best placed to proper such initiatives due to the nature of partnerships required to develop shared working spaces,” the government said.

The government also noted the recommendations to issue a discussion paper on the utility of the Export Market Development Grants scheme, to take into account whether the industry is improving the diversity of its workforce and to roll out a 21st century broadband infrastructure.

The only recommendation the government did not seem to reject was that it facilitate dialogue between video game industry associations and groups that use “serious” games, including in healthcare and education.

But in supporting the notion, the government said it was a matter for industry to pursue itself.

“The government encourages IGEAA, GDAA and other peak organisations to pursue connections with relevant sectors of government and business that represent potential markets for serious games,” the government said.

The response was widely panned by games industry representatives and entrepreneurs, with many local developers saying they are now considering moving overseas.

Mr Curry said the industry body still hopes to work with all levels of government.

“We will continue to work with state, territory and federal governments on creating an environment that supports the Australian development sector to compete on a more level playing field, both locally and internationally,” he said.

To coincide with the tabling of the response, Communications Minister Mitch Fifield announced that government would providie $17,000 in funding to the Game Developers’ Association of Australia (GDAA) to present at the 2018 Game Developers Conference in San Francisco in March.

The announcement did not mention that the government had also just tabled the “hugely disappointing” response to the games industry inquiry.

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