Remember how Peter Jackson and Warner Bros pulled the old Hollywood shakedown on us? By making a hollow threat to film elsewhere they got an extra $33 million and a law passed just for them. This was supposedly necessary to save a vital economy gain for the country but the Government knew that was bollocks all along.
Vernon Small reports that Treasury had been warning that the Government should get rid of the Large Budget Screen Productions Grant months ago:
“Months before the decision to subsidise The Hobbit, officials had called for an end to assistance for the film industry, saying it was negative for the economy and presented a risk to the Government’s books.
Documents issued under the Official Information Act show that Treasury urged ministers in February to discuss whether any further assistance was merited. “…
“….The demand-driven nature of the LBSPG … can also create forecasting problems and fiscal risks for the Crown.”
Like the risk of the country flying to into a panic because a major studio says boo, leading to the government handing over another $33 million.
“[Treasury's advice] was never discussed between ministers because there was no need.”
Yeah, no need until it was too late and we were caught in the middle of Warner Bros shakedown. Always prepared, the Nats.
Treasury considered the evaluation raised “sufficient concern about the scheme’s value for ministers to approach any extension or reconfirmation of the grants with caution”.
Well caution is one thing we didn’t get. The Government appears to have asked for no advice whatsoever on the benefits and costs of caving into Jackson and Warners’ threats, they just got out the cheque book and said ‘how much’?
In the February paper, officials argued it was not clear if the assistance provided significant economic benefits.
In terms of cost it sometimes exceeded support for tourism, one of the largest export earners, and support for private sector research and development of $47.4m “where the evidence of benefits to the wider economy is strong”.
Key got hustled out of $33 million and played the hero who had saved the day for New Zealand. But would this money have been more productively spent on R&D or on teachers’ pay, rather than on assuaging an empty threat?