Anyone who thinks that the Actors’ Equity dispute matters is a rube. Hollywood deals with unions all the time, and the Irish and UK film industries are more highly unionised than here. The truth is that this is just the same old trick of the international film industry threatening us with tax breaks if they don’t get what they want.
The 1990s National Government abolished tax breaks for films. But it post-dated the implementation until 2000 and grandfathered the breaks for the Lord of the Rings when Peter Jackson and the producers threatened to take production elsewhere. LOTR got about $200 million in tax breaks.
In 2002, Richard Taylor (Peter Jackson’s Weta co-founder), threatened the government with capital flight if the tax breaks weren’t brought back in:
“Double Oscar winner Richard Taylor says New Zealand might lose out as a film location if the Government refuses to reinstate tax incentives for visiting film productions.”
Michael Cullen wasn’t keen on the taxpayer shelling out, at gunpoint, to one industry but what’s a government to do when a genuinely international industry threatens capital flight? The Large Budget Screen Production Grant was introduced in 2003. The government has paid out about $200 million under this grant, including $45 million for Avatar.
In 2009, Peter Jackson got himself appointed to review the tax break legislation. In July this year, he recommended that big films (ie. his projects) get more tax breaks. Bill English said no.
A couple of months later, a tiny, settled union dispute suddenly becomes a huge ‘crisis’ and Jackson’s latest project stands to get more tax breaks.
This is what the Hollywood does. An international industry, truly global capital, playing us off against other countries.
What are we to do? Ultimately, the way to stop international capital forcing countries into a race to the bottom is to agree international rules between countries. Obviously, that’s not an immediate option. So, we’ll end up paying more to stave off the threat of capital flight because the wider economic benefit makes it worthwhile.
John Key is now desperately trying to talk down how much we can pay and trying to act blase about whether or not the filming happens here. He resembles a middle ages traveler trying to nonchalantly hide some of his jewels from the highwayman. But Key bears responsibility for talking up the ‘crisis’ as an opportunity to cynically put the boot into unions.
It is Key’s responsibility to keep the Hobbit in New Zealand at as little cost as possible, and certainly without some tin-pot dictatorship-style change to employment law.
PS. Funny to see Key, after the meeting, admitting that one of the reasons Warner Bros wants more money from us is the high NZD/USD exchange rate. Key had earlier dismissed that idea when Trevor Mallard raised it. Who’s the money market expert now?