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All the films I make are about 60% of what I imagine them to be.

There's no doubt that when you're up for an award you want to win, but, finally, art is not a horse race. If Gladiator (2000) was a great film in its form and Tiger & Dragon (2000) a great film in its form, which is better? They're just different. It's not a horse race. You can't say, you know, "Gladiator" is so much faster!"

One of the proud moments for us was Robert Wise, who directed Meine Lieder, meine Träume (1965) and West Side Story (1961), he is the great-great-grandfather of musical cinema, and he said, "I've seen Moulin Rouge! (2001) and the musical has been re-invented." I bring this up because you get that kind of thing and that's wonderful.

So, what is creative freedom? We can make what we want, how we want. The only constraint is: not for any budget.

That's the only plan I've got - to not have a plan.

Well, it's pretty hard for them to sack me and put someone in to do iambic pentameter in modern dress, you know? What we've made, we only have one ironclad guarantee every single time, which is it will never work and no one will ever see it. Because it has gone on to more than pay its bill, and, by varying degrees, it has been acclaimed, the notion that the studio interferes . . . I like to engage with them, I don't have a producer . . . There's a whole system in Hollywood where the director never speaks to the studio, but I like to engage them in a discussion. I listen. But then finally we listen to ourselves.

. . . if you make a film full of risk, studios don't run towards you to give you $50,000,000 in order to reinvent the post-modern musical, I can tell you. If you do manage to cajole them into doing it and you want to maintain the flag of creative freedom, you better make sure that it pays its bill.

There are successes and failures in what we're doing, but that's the road we're walking down - stealing from culture all over the place to write a code so that very quickly the audience can swing from the lowest possible comedy moment to the highest possible tragedy with a bit of music in the middle.

So we thought, let's look back to a cinematic language where the audience participated in the form. Where they were aware at all times that they were watching a movie, and that they should be active in their experience and not passive. Not being put into a sort of sleep state and made to believe through a set of constructs that they are watching a real-life story through a keyhole. They are aware at all times that they are watching a movie. That was the first step in this theatricalized cinematic form that we now call the Red Curtain.

So, yes, we won for ourselves a criteria, a mantra, which is that we only make what we want to make in the way we want to make it. I believe we make universal stories for the world, but it has an Australian voice, and to maintain that voice you must be connected to your land. So the need to be in Australia motivated us to motivate Fox to build this studio down there, where they now shoot "Star Wars" and "The Matrix", so it's a wonderful facility.

The primary myth part came out of a revelation of the value of [William Shakespeare]. Those are dramas that play to the simple person and the complicated person.

But above everything else, [William Shakespeare] had to deal with a city of 400,000 people and a theatre that held 4,000 and everyone from the street sweeper upwards. Not unlike your local cineplex, and he used everything possible to arrest and stop that audience - really bawdy comedy and then, wham! Something really beautiful and poetic. Everything we did in William Shakespeares Romeo & Julia (1996) was based on Elizabethan Shakespeare. The fact that there was pop music in it was a Shakespearean thing. We would be fearless about the lowness of the comedy.

We went to this huge, ice-cream picture palace to see a Bollywood movie. Here we were, with 2,000 Indians watching a film in Hindi, and there was the lowest possible comedy and then incredible drama and tragedy and then break out in songs. And it was 3-1/2 hours! We thought we had suddenly learnt Hindi, because we understood everything! [Laughter] We thought it was incredible. How involved the audience were. How uncool they were - how their coolness had been ripped aside and how they were united in this singular sharing of the story. The thrill of thinking, "Could we ever do that in the West? Could we ever get past that cerebral cool and perceived cool?" It required this idea of comic-tragedy. Could you make those switches? Fine in Shakespeare - low comedy and then you die in five minutes.

The Red Curtain requires some basics. One is that the audience knows how it will end when it begins, it is fundamental that the story is extremely thin and extremely simple - that is a lot of labor. Then it is set in a heightened, created world. Then there is a device - the heightened world of Strictly Ballroom - Die gegen alle Regeln tanzen (1992), Verona Beach. Then there is another device - dance or iambic pentameter or singing, and that's there to keep the audience awake and engaged. The other thing is that this piece was to be a comic tragedy. This is an unusual form, there's been a few goes at it - [like] Dancer in the Dark (2000) - but it's not common in Western cinematic form.

[on his version of 'The Great Gatsby'] The novel wasn't set in in a period called 'The Minimal Twenties'. It was called 'The Roaring Twenties'. So it had to roar.

[on Beyonce Knowles] She can step onto a stage and draw every single person in the audience into an intimate experience. No one has that voice, no one moves the way she moves, no one can hold an audience the way she does. And she keeps growing and evolving in the ways that she expresses herself as a singer, as a performer and now as a mother. She and Jay Z are the royal couple of culture, and she is the queen bee.