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WE take great pride when Australian actors find success in American films.

Cate Blanchett, Nicole Kidman, Russell Crowe, Hugh Jackman, Eric Bana, Geoffrey Rush, Rose Byrne, Toni Collette: all these actors are considered marquee names in Hollywood. However, they have all expressed a strong desire to make more Australian films.

If the Australian film industry were big enough to make the kind of films they want to participate in, films that resonate with an international audience, they would jump at the chance to make their living in Australia.

The industry, to date, has not had sufficient resources to support this type of big-budget production, but the new federal government producer offset, a 40 per cent rebate on film budgets, could change all this.

The offset was established for cultural rather than economic reasons. Although it has clear economic aims, it is fundamentally shaped to deliver cultural ends. The offset has been designed to assist Australian producers build strong companies and attract finance, enabling them to compete more effectively in the international market and, as former communications minister Helen Coonan and former arts minister George Brandis said when the offset was introduced, to "make blockbuster Australian stories that can showcase our culture to the world".

The offset is an incentive to broaden our imaginations and to harness an opportunity for building an Australian film industry that is internationally relevant and competitive.

There has been much talk recently about several US productions applying for the producer offset and the possibility of them moving overseas if the applications are rejected. But the offset has not been put in place to support US studio films dressed up to look Australian by adding a few Australian actors, accents and allusions.

These films have their own incentive: the internationally competitive 15 per cent location offset, designed to attract large-scale foreign film and television productions to Australia to strengthen our production and acting skills base and showcase Australian locations. True, it's not the 40 per cent offered to local productions, but that's the point: the higher level has been set specifically for local producers, who face particular economic and market difficulties, to make Australian films.

For all the talk of US cultural imperialism, there's no reason this country can't produce its own cinema blockbusters. We have the stories, the writers, producers, directors, actors and highly skilled crews.

The offset acknowledges that it's more difficult to fund a film with an original story-line, such as Baz Luhrmann's Australia, than it is to fund a franchise such as Superman. It all comes down to risk. Superman is bound to recoup its investment when it opens in cinemas across the US. Australia, on the other hand, with its team of Australian creatives and imaginative Australian story, has a much smaller potential local audience, so it is less certain of automatically recouping its budget. But Australia, we hope, is the sort of film Australians, and many international filmgoers, will want to see.

What makes an Australian film Australian? This is the key question facing the Government and its proposed agency Screen Australia. Whatever the formula, it is clear that a film should demonstrate high levels of Australian content as well as high levels of Australian participation in the production, including writer, director, producer, cast and crew. A film with an American script, American source material, American producers and directors and American principal actors does not become Australian simply by virtue of being shot on location in Australia.

Far from driving the production of local films that we'd like to see our leading actors and directors working on, opening the producer offset to Hollywood blockbusters masquerading as local content would act against this.

Giving US studio films access to the offset could blow out the cost to government of the incentive, placing it in jeopardy. There has been talk that the 40 per cent offset should be capped. Forward estimates are that the rebate will cost the taxpayer $270 million over three years. Consider that the average big-budget American movie would take $80million of this if it qualified for the offset, leaving very little for the local industry.

That's not to say Australian film needs a white picket fence. The industry loves big US productions. The actors, crew and all the ancillary trades that flock to big film sets love the pay cheques and the experience that big films can provide.

However, the Government needs to stand by the original intentions of the producer and location offsets.

Australians want to see a wide range of local stories with Australian stars. With the global success of films such as Mad Max, Happy Feet, Crocodile Dundee, Moulin Rouge and The Adventures of Priscilla, Queen of the Desert, we've shown we can make films with truly international appeal.

The producer offset must be aimed at making more films such as these.

Simon Whipp is director of the Equity section of the Media, Entertainment and Arts Alliance.