Editorial: Let film subsidies be

On his visit to Hollywood film studios last week the Prime Minister, John Key, appeared to have little time to engage in much celebrity spotting.

News accounts of his visit indicate that the bulk of his trip was occupied instead with talks with the high-powered heads of the giant studios for whom the celebrities work. A highlight of the visit was a dinner at a palatial residence owned by Jon Landau, a business partner of James Cameron, director of such blockbuster movies as Titanic and Avatar. Among the 40 or so guests were the heads of some of the biggest studios such as Sony, Fox and Warner Brothers.

The prime minister might have been more innocently, and less expensively, engaged in hobnobbing with the stars. For as delighted as the studio bosses might have been to meet the prime minister of New Zealand, it can be surmised that they were not there to meet him and hear only of the merits of New Zealand actors and production facilities and of our landscape as the location for any future productions they may have in mind.

While Cameron extolled those virtues in a speech he gave to the diners, the hard-headed men of business who run the studios would have been more interested in other more tangible offers the prime minister might be able to make.

Key gave an indication of this when he told the New York Times during his visit that New Zealand was "underserved" in American television production and that the subsidies that are available for large movie productions might be "tweaked" to induce more of them to come here.

If that is indeed the Government's intention it should rethink the idea. For as glamorous as it might be to have big stars and directors making hit movies in New Zealand, the financial benefit to the overall economy of subsidising them to do so is by no means clear.

New Zealand has provided subsidies since 2003 for movie productions that spend $15 million or more. In the decade since they began, the subsidy has cost more than $500m, $60m of it on The Hobbit alone. Other subsidies for smaller productions are also available.

New Zealand is not alone in subsidising movie production. Australia, Canada and many American states do the same. The Australian Prime Minister, Julia Gillard, spoke recently of increasing her country's subsidies. In the United States, however, financially strapped state governments have begun to question them.

Movie studios and unions have produced studies showing the alleged benefits of the subsidies, but more rigorous independent studies show convincingly that they cost more than they are worth.

While studios, actors, production houses and the like undoubtedly do well out of them, they are a drain on the overall economy. Massachusetts, for example, found that it was paying a wildly uneconomic $300,000 for each job the movie industry provided to the state. By coincidence, as Key was in Hollywood last week California Governor Jerry Brown signed a law extending California's own subsidy to the movie industry.

However, the law was passed only after fierce debate about its merits and the subsidy was extended for only two years.

The idea of tax breaks for particular industries has long since passed. If lower taxes are good to promote industry, they should apply to all industries not just to some favoured ones. More subsidies for movies is a pitch that should not get a green light.

The Press