The minister who approved big film sweeteners for the Avatar sequels knew the deal would cost New Zealand's economy millions of dollars.
Economic Development Minister Steven Joyce was repeatedly advised by officials not to budge on the subsidies for big-budget television and film productions, despite intense lobbying from the industry. Officials said the bigger subsidies demanded by the industry were a "race to the bottom" and the Government was not expected to prop up other industries.
Ministry of Business, Innovation and Employment officials also warned the changes would turn a modest economic gain from the grant scheme of $14 million into a $76m loss.
But in December, Mr Joyce announced the subsidies for big-budget productions pushed by the industry would go ahead.
As as well offering more money for any big international production, the higher subsidies paved the way for a $125m grant demanded by 20th Century Fox to keep the Avatar sequels in New Zealand.
Speaking at the time, Mr Joyce said the increase was not part of a "race to the bottom" to compete for Hollywood productions with other countries.
Yesterday, he again defended the move.
My Joyce said evidence had emerged quickly late last year that the New Zealand film industry was in trouble and losing big international production to other more generous countries.
The changes had occurred faster that MBIE officials had expected and their advice needed to be balanced against "other players", he said.
"Other players felt it had to be increased or the industry would suffer quite a significant paralysis," he said.
"We just had to make a judgment call on that, and we did."
Briefing documents issued under the Official Information Act show "other players" were mostly film industry executives, the Film Commission and Film NZ.
On September 24 last year, Sir Peter Jackson met Culture and Heritage Minister Chris Finlayson on the set of The Hobbit to discuss the screen sector.
Mr Finlayson was not available for comment yesterday and a spokesman would only say the pair talked about "a range of issues affecting the film industry".
As a result of that meeting, the Ministry of Culture and Heritage prepared "back pocket options" to offer film subsidy hikes for big-budget productions.
Briefings show MBIE officials were surprised by the proposal and warned Mr Joyce it would undermine the film grant scheme's reputation.
On October 2 last year, Sir Peter had a second meeting with Mr Finlayson, along with other high-profile film industry players and Mr Joyce.
MBIE officials again advised Mr Joyce to stand firm on raising the subsidies and insisted the Government "wanted to avoid a bidding war" with other countries.
After the meeting, the Film Commission continued to push for bigger subsidies and warned the New Zealand film industry was facing a "prolonged drought".
On October 31, the commissioner submitted a series of economic papers to the Government, including two paid for by the film industry, supporting a rise in the subsidy.
Six weeks later, the increased subsidies were approved.
SAY 'NO' TO SUBSIDIES, MINISTER TOLD
December 2012: Ministry of Business, Employment and Innovation officials tell their minister, Steven Joyce, the Government would need serious convincing to increase big-budget film and television subsidies from 15 to 20 per cent.
April 21, 2013: The minister is told an industry proposal to increase the subsidy to 20 per cent would lead to economic losses, possibly as much a $76m over eight years.
April 23, 2013: Officials again urge the minister not to increase the subsidy to 20 per cent, saying they have re-run the numbers and it still does not stack up.
June 24, 2013: Ahead of the announcement of improved TV subsidies, the minister is advised to emphasise the subsidy will not rise to 20 per cent because the Government is not interested in a "race to the bottom".
October 1, 2013: Ahead of meeting with film industry players, including Sir Peter Jackson, the minister was urged to stress that a rise to 20 per cent was not being considered.
December 16, 2013: Mr Joyce announces subsidies for big budget screen productions will rise to 20 per cent and 25 per cent for productions with significant economic benefits, such as Avatar.
- The Dominion Post
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