The federal government is preparing to release the findings of its review of the screen sector, which has been hit by the global financial crisis and a rising Australian dollar.
The review, set up by then arts minister Peter Garrett, is looking at the effectiveness of funding and policies, including three tax offsets introduced in 2007.
There is a tax rebate of up to 40 per cent for producers who make Australian feature films, television and other projects, and a 15 per cent location and post-production tax rebate for foreign films made in Australia.
Industry insiders says they are no longer internationally competitive, mainly due to the rising Australian dollar, which has been on parity with the Us dollar for months.
There are also concerns that because the incentives are linked to the tax system they are not timely and lead to interest costs on financing.
The location rebate, while similar to the levels offered in New Zealand and United Kingdom, falls well below the rates in Canada, the United States and eastern Europe.
Ausfilm, representing private and government screen sector groups, says the location rebate needs to be increased to 30 per cent.
It also wants a requirement that foreign productions spend 70 per cent of their budgets in Australia to qualify, to be removed.
While this has been promised, it hasn't been legislated yet.
Ausfilm, in its submission to the screen review, noted that foreign features dropped to less than one per cent of film production expenditure in 2008/09.
Narnia was the only big-budget US film shot in Australia during the past few years.
"Australia is now facing a sustained period without international film production activity," the submission warned.
It cited a PricewaterhouseCoopers analysis that showed a boost to location incentives would pump more than $1.8 billion into the economy over 10 years.
The group representing screen producers in Victoria voiced similar concerns, saying foreign investment had historically helped to offset "compromised domestic budgets".
"When this market becomes insignificant, the industry becomes unsustainable," Screen Services Association of Victoria wrote in its submission to government.
Arts Minister Simon Crean refused to pre-empt the review but acknowledged the concerns.
"There is an ongoing commitment because we want to develop and showcase our internationally renowned creative talent," a spokesperson for the minister told AAP.
Mr Crean is expected to release the review's findings later this week.