Taxpayers fork out big bucks to movie studios

The taxpayer bankrolled blockbuster film and TV productions to the tune of $75 million over the past two years – with most of that going to US studio giants 20th Century Fox, Paramount and Disney.

Avatar, District 9, Tintin, The Lovely Bones and children's TV show The Wot Wots were all awarded cash under the Large Budget Screen Production Grant scheme in the 2009-2010 financial year.

In this financial year $23m was paid out for Yogi Bear, The A-Team and TV show Spartacus.

Demand for the grants was so great the Ministry of Economic Development blew out its $35.5m budget and had to request a $16.9m top-up last February.

The scheme offers a 15% rebate on production spending in New Zealand above $15m.

To get its $52.9m grant, Avatar makers had to guarantee spending $362.75m here, and Yogi Bear $41.5m.

More than $245m has been paid out since the grants were set up in 2003.

The scheme will be reviewed this year.

Local movie industry heads argue the tax breaks are vital to create jobs and keep skills here, ensuring smaller local productions get made.

But economics professor Tim Hazledine says the film industry is unique in getting incentives and our politicians are "star struck".

"It's the most glamorous industry of all, and they get to go to these red carpet premieres in Wellington. It's a lot of fun I suppose.

"But I'd rather studios came here because our people are so good, not because they get a little bribe to do so.

"We don't subsidise our farmers. If we did it for dairy farmers, we'd certainly be breaching free trade agreements.

"We are subsidising the shareholders of Paramount, these companies and foreign consumers who see the movies."

The Auckland University business school lecturer suggested the government take an "equity stake", which would see grants returned if a film was successful.

Treasury documents show officials questioned the economic value of the scheme last year because it created "fiscal risks for the Crown". Officials urged caution in extending the scheme.

However, a ministry spokesman said the productions brought more than $1.7 billion in qualifying expenditure, and "created jobs, accelerated the talent and skill of our local film industry, and improved New Zealand's film infrastructure".

He said there were "spillover benefits" to other sectors, such as tourism, and the Government was committed to maintaining the scheme.

Tom Greally, general manager of visual effects company Weta Digital, said the grant was one component of an overall package a studio evaluated when it looked at finding a production location.

"The ability of New Zealand to sustain a large-scale entertainment industry, and the opportunities for revenue it provides, is contingent on competing with countries around the world that are hungry for the chance to take the opportunity from us."

Park Road Post Production general manager Cameron Harland said: "We are fighting head-to-head with all of the big Hollywood post-production houses. Even if a film comes and shoots in New Zealand, it's not a given it is completed here. What the rebate does is encourage them to spend as much as they can in one country, because they get that rebate."

The New Zealand grant was "relatively modest" compared to other countries', he said.

Production Shed TV managing director Yvonne Mackay said attracting big-budget productions allowed smaller local-made productions to go ahead because it kept skilled workers here.

Sunday Star Times