During the whole sorry Hobbit saga two commentators stood out well clear of the pack for the depth of their coverage and the accuracy of their insight. Those commentators were our own Irish Bill, and Scoop’s Gordon Campbell. As the dust settles today Campbell has written a long piece on the settlement and its implications. The whole thing is well worth a read, but here are some key points:
At the very least, that’s an extra $US25 million sweetener for Warners. Our employment laws for film industry workers will also be changed. It means that John Key has done what he said two days ago New Zealand couldn’t afford to do – match the 20% subsidies being offered by countries like France and Hungary, Earlier this week, Key said we could offer Warners some more money, but couldn’t match the offers being made by other countries:
Mr Key said Warner executives had raised the disparity in tax rebates in different countries; New Zealand’s rebate is 15 per cent on domestic spending, less than countries such as France and Hungary (20 per cent) and Ireland (up to 28 per cent).
“That is large and we can’t match that,” Mr Key said. “What I can’t rule out is [that] we won’t look at some things at the margins that might make the deal slightly better.”
Yet matching the bids by some of those countries is exactly what he’s done. At 15% the basic subsidy on the $US500 million budget for The Hobbit stands theoretically at least, to be $US75 million. Add in that extra $US25 million and you get a total of $US100 million – which is the headline rate you’d get from the 20% subsidy on offer in France or Hungary. Except in addition, we’re also offering (a) to change our employment law and (b) to offer greater flexibility about the qualifying criteria for the LBSPGS – though the detail of those criteria changes can’t be revealed for ‘reasons of commercial sensitivity’ lest others, presumably, press for similar treatment.
Key said that we couldn’t match the tax deals offered by other countries, but according to Campbell’s calculations that’s exactly what we have done. Campbell also has harsh words to say about Key’s “skill” as a negotiator:
For an allegedly hard-nosed former merchant banker, Key also seems to have been remarkably inept as a negotiator – having given away his intentions (yes, we’ll change the employment law, yes, we’ll give you more money) even before he entered the bargaining room. There seems to have been no attempt to call Warners’ bluff and use the one factor – time – where we actually had Warners over a barrel. …
It was always going to be hard enough meeting the tight schedule in optimal conditions out of Miramar, let alone adding foreign locations, foreign crews, and foreign trade unions into the mix. In these circumstances we had no reason to cave into Warners – and getting an ad about New Zealand as a location onto the eventual DVD is a laughable trade-off. Key’s basic negotiating stance seems to have been: I’m willing to jump, but don’t ask me to jump too high, please. What a tiger.
Leaving aside the sale of our sovereignty, even the poor agreement reached by Key is good news in purely economic terms:
In the end.. even this crappy deal was still value for money, I’d argue. Key does appear to have bargained like a two-week old kitten, but the stakes involved will still mean we come out ahead.
Campbell goes on to make a compelling case for using this opportunity to strengthen the film industry in NZ much more broadly and robustly than we did after LOTR. We need to move away from reliance on occasional (and temperamental) “superstars” like Peter Jackson, and towards a broader based industry that is more genuinely committed to New Zealand and its workers.
For Campbell’s full, detailed, and thoughtful take on all this, go read his original article here.
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