Critical eye on Avatar deal

AND ACTION: Director James Cameron at yesterday's announcement about the Avatar movies.
AND ACTION: Director James Cameron at yesterday's announcement about the Avatar movies.

The Government is talking up lavishing taxpayers' dollars on Avatar sequels - but the Treasury has already panned the spending as a turkey.

As part of the deal announced yesterday by Prime Minister John Key, two fellow ministers and Avatar director James Cameron, the movies' producers will get at least $125 million in taxpayers' money in return for spending at least $500m making the films in New Zealand.

The subsidy is more than double what the Government paid for the first Avatar film.

Mr Key hailed it as "a great Christmas present for those involved in making world-class movies".

But that was not how Treasury officials saw the Hollywood sweetener.

Cabinet papers show the officials argued against the more-generous screen subsidies, claiming the current ones already offered poor returns and benefits.

Competing with other countries to offer more-generous perks for the film industry was not good economic development policy, they said.

Economic Development Minister Steven Joyce said the Treasury's view did not take into account the importance of building New Zealand's international profile.

"Every now and again we have to put our hand up . . . to show that we are worthy of the attention of the world."

He also said it was important to act quickly to secure the Avatar sequels, in the face of a high kiwi dollar and more-generous offers from other countries trying to entice big-budget films.

Wairarapa-based Cameron said that, without the increased government support, it was likely production of the movies would have been shifted overseas.

"Despite my personal advocacy for shooting here, we would have had to look very cold and hard at the numbers."

As well as helping to attract international projects, yesterday's funding changes will mean more generous support for New Zealand production, particularly television, to help build the industry's longer-term resilience.

The Government will even dabble directly in the industry by taking a stake in New Zealand film and television productions costing $15m to $50m.

But Treasury argued that current film subsidies had already negatively hit the Crown's books to the tune of $168m, and there was little information about how much the new ones would cost.

The papers also show that, despite claims the changes will boost the local industry, the Government is not expecting many more films or series to be made soon.

Government spending on New Zealand productions under $15m was not expected to grow in the next five years, and only two Kiwi films were expected to attract direct Crown investment.

Funding big-budget international films could cost an extra $20m a year, but it was unclear how it would be funded.

The announcement that ministers had rejected that advice was greeted enthusiastically in Wellington.

Mayor Celia Wade-Brown said the Avatar films alone would bring hundreds of millions of dollars into the capital.

"The first Avatar generated around $100m directly for Wellington, and there's the broader effect where Wellington's innovative industries have benefited from the location of so much expertise, talent and technology," she said.

For example, digital imaging company Matakina's 3-D breast cancer detection technology would not have been possible without development work at Weta Digital.

Wellington television production company Pukeko Pictures' chief executive Andrew Smith said the new funding could open opportunities.

"It has been difficult to make the incentive work for television."

However, he said details of the scheme were sketchy, including how much funding would be available and what productions would qualify.

Actors Equity New Zealand president and actor Jennifer Ward-Lealand said that, combined, the measures would be a "shot in the arm" for the screen industry.

"The producers of Avatar have shown significant good faith in working with the local industry and this must be acknowledged."

The Dominion Post