But the release of Baz Luhrmann's epic "Australia," starring Kidman and Hugh Jackman, has raised optimism that Australia's film industry has the potential for a comeback. The Australian government, which funds most of the domestic industry, recently initiated a 40 percent rebate on the film budgets to encourage production, and it has consolidated the country's three film agencies into an entity called Screen Australia.
But there's widespread agreement that Australian films need to gear themselves to what audiences want to see. Given that the English-speaking nation enjoys American movies, Australian filmmakers face a fundamental quandary: How do you compete with Hollywood films yet still maintain a unique cinematic identity?
"We don't feel we should be copying Hollywood models – we don't think that's our strength," says Tait Brady, Screen Australia's executive director of marketing. "We are continually emphasizing that ... the way you break out is to be different."
A number of Australian films have appealed to both domestic and international viewers by adding an Australian twist to different genres. "Mad Max" was a road movie set in apocalyptic Australia, "The Man from Snowy River" was a Wallaby Western, and "Crocodile Dundee" boomeranged from Aborigine country to America and back for a fresh take on the fish-out-of-water comedy. But those successes are a thing of the past.