"The Wolverine" is expected to bring more than Aus$80 million into the country
Australia was once a regular destination for top Hollywood producers making big-budget blockbusters until it was priced out by its soaring currency -- but a clawed mutant could herald a revival.
X-Men comics spin-off "The Wolverine" is being shot in Sydney, the home town of star Hugh Jackman, courtesy of a Aus$12.8 million (US$13.4 million) government subsidy.
Some four years since the release of the last major blockbuster filmed Down Under, Baz Luhrmann's romantic outback epic "Australia", the local film industry sees the funding as a lifeline and hopes it will trigger a resurgence.
The sector's woes are an example of Australia's two-speed economy, where resources firms are booming but other companies struggle with the consequences of their success, particularly the rise of the Australian dollar.
Back when the Aussie currency languished well below parity with the greenback, a string of big movies were filmed in Sydney including "The Matrix" (1999), Tom Cruise's "Mission: Impossible II" (2000) and "Moulin Rouge!" (2001).
"As you can imagine, when our dollar was 52, 65, 72 cents, 83 cents (against the US dollar) ... we were seen as a very attractive destination," said Debra Richards, chief executive of marketing body Ausfilm.
With more competition from other countries, which have increased financial incentives for filmmakers, big productions in Australia have dwindled.
Richards argues the government needs to increase its appeal by lifting its subsidy for using Australia as a location from the current 16.5 percent of qualifying expenditure to 30 percent to level the playing field.
"We're not being looked at because it just is not viable financially. Even though people want to work with us, when you look at it and you compare it to other territories, then it's not as attractive," Richards said.
"So kicking the location offset up to 30 percent allows us to still be compared -- at the moment at 16.5 we're not."
She is hopeful the federal government's cultural policy to be released later this year will alter the rules.
Prime Minister Julia Gillard said it was Jackman himself who convinced her to provide the money to bring "The Wolverine" production to Australia because it would create more than 2,000 jobs and keep specialist skills in the country.
She announced the funding last month on the movie set at Sydney's Fox Studios, standing alongside Jackman who is reprising his best-known performance in the mutant title role.
"He explained to me that without government assistance it would be very hard to see this venture take place in Australia," Gillard said. "I wanted these Australian jobs, I wanted the injection into our economy."
Australia has clocked robust economic growth in recent years despite the global slowdown, but Gillard added that while the mining and resources sectors were booming, strong creative industries helped build a diversified economy.
"I wanted the skills that it would mean for the future," she said.
"We haven't seen a blockbuster in Australia since 'Australia' with Hugh and Nicole (Kidman) and we are at risk of the skill sets being dispersed around the world and importantly not bringing the next generation through."
"The Wolverine" is expected to bring more than Aus$80 million into the country but for his part Jackman, 43, said he was simply happy to be home.
"To be shooting a movie of this magnitude here at home is one of the great privileges I have had in my career," he said.
Gillard said the grant was the equivalent of what the film would have received if the tax rebate was lifted to 30 percent, and indicated that she saw the benefits of providing incentives for foreign films.
"We decided it was a good investment," she said.