Movie Subsidies Need More Analysis

With the Australian government now offering movie producers a whopping 40% rebate on any local expenditure, New Zealand movie-makers, concerned about an exodus to the west, are looking for parity.But can anyone name another industry that receives such exorbitant handouts?

Peter Jackson and his peers certainly deserve the many accolades they have received for bringing a world class industry to our doorstep, but does that mean we have to heavily subsidise it with public money? The industry already receives a 15% rebate for local spend under the large budget screen production scheme. Post-production work performed in NZ also qualifies.  In addition, the film industry has been the beneficiary of government largesse in the form of large grants towards sound studio facilities in both Waitakere and Wellington. The government funded NZ Film Commission also provides co-funding for selected feature films.

The Film Commission claims that 2 million New Zealanders went to see a locally made production of some sort in the last year, so there is no question that the industry is in good heart. Of course part of the reasoning behind providing this support is that it showcases New Zealand scenery and exports our culture to the rest of the world. But I can’t think of any “large budget” local production that has done this since Lord of the Rings (although there has been several smaller budget projects). Animated productions like Halo or Tintin certainly do not showcase New Zealand, although they do help to maintain the resident skill pool.

The bottom line is that there needs to be a full economic analysis before any increase of public investment in the film industry. I’d love to know how many permanent full-time jobs have actually been created for actors, animators and technical support crews over the last five years. My understanding is that many of the crew positions are sub-contracted to itinerant workers on a part-time basis, some of whom depart the country between gigs. What has been the net increase in the tax base as a result of the growth of this industry? Given the complex nature of foreign controlled licensing and distribution, what is the actual export return from a NZ-made feature film?

Film receives most favoured status because of the perceptions of glitz and glamour and because film producers are very good lobbyists. And what politician could resist an offer of front row seats on opening night?

2 thoughts on “Movie Subsidies Need More Analysis

  1. Because of the seasonal nature of film work most workers are contractors, and essentially entrepreneurs. I believe this is also the case even in Hollywood (but I may be wrong!). So I’m not sure full time jobs is a good way to measure growth or effectiveness of the industry.

    Instead, maybe we should be measuring the growth of entrepreneurial micro-businesses, and setting up an infrastructure (affecting tax, among other things) that represents the reality of film work.

    Whether that information would help us economically as a nation is another question.

  2. There’s absolutely no question that the film industry contributes to the economy and that a number of support industries have grown up around it as a result. But when there are scarce resources, it would be unreasonable to subsidise an established industry when there are others needing a leg up.

    I don’t have a major problem with the existing level of support (especially now that the R&D tax credit is about to kick in for other sectors), but I’m questioning whether we are in a position to compete with the Aussies.

    If a particular industry cannot survive without a 40% subsidy on expenditure what does it say about the quality of the business?

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