Editorial: No hobbit-sized task

18:57, Nov 27 2012

While some may find all the palaver Wellington is putting on for the premiere of the first movie in Sir Peter Jackson's projected Hobbit trilogy is ever so slightly over the top, everyone will be hoping the movie will match the stupendous success of Jackson's The Lord of the Rings series.

The successful completion of a $500 million Hollywood production is, even when everything is straightforward, a major achievement in itself. Movie-making on this scale is a delicate process and easily knocked off kilter, and this production encountered a number of setbacks - including money problems with the producers and a serious row with a union - which at several points could well have derailed it.

So beyond the plaudits that will come with the glitz and the glamour of the premiere, and the cheerleading bordering on silliness of some of Jackson's more extreme fans, Jackson deserves congratulations for having got the trilogy, whose final cost will be the size of a significant industrial enterprise, under way.

It was not all Jackson's own doing, of course. The New Zealand taxpayer has also made a significant contribution by way of hefty tax breaks to the production. Without these breaks the movie might not have been made, or almost certainly not made in New Zealand. Although Prime Minister John Key has not been slow to cosy up to movie moguls, tax breaks for movies actually started in 2003 under the previous Labour government of Helen Clark, who had a propensity for dispensing largesse to the "the arts". In the ensuing nine years the scheme has cost some $500 million. For The Hobbit alone, it has been worth $60 million.

While this obviously produces a happy result for the makers of movies and all who work on them, the economic logic of it is hard to fathom. Why New Zealand taxpayers should pay to subsidise the Hollywood lifestyles of movie producers, directors, actors and so on is something that has never been adequately explained. This is particularly the case when the Government's spending in just about every other area - education, health, welfare - is being watched over with hatchet-faced vigilance.

If it is accepted that the prospect of incentives will lure business to this country - and it seems that the breaks available to movie productions do bring them here - there is no reason why they should not apply to every business equally, rather than just to movies. The argument is that the business the movies bring to the country, directly and otherwise, outweighs the cost to the taxpayer. Studies elsewhere have shown that that is doubtful. But if it is true, there is nothing unique about the business of making movies - it would apply to any other business that could be lured here by incentives. If lower taxes are good for the country, there is no need for the Government to play favourites.

Unfortunately, incentives for movies have come to be accepted, no doubt for the aura of glamour the movies bring with them. Localities around the world have got into what appears to be a bidding war to see who can provide the most attractive ones. Under pressure from Jackson's friends in Hollywood, the prime minister earlier this year hinted that the incentives might be increased. Yesterday, fortunately, he ruled that out. The Government altered employment law to accommodate The Hobbit. That is the limit of what it should do.


The Press