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Subsidising Pandora’s box-office

Written By: - Date published: 11:46 am, January 25th, 2010 - 43 comments
Categories: business, Media - Tags:

 Gerry Brownlee is defending the $45 million tax break the Government gave the makers of Avatar to do most of their special effects work here.

“Attracting large budget film productions here offers wider benefits to the economy, including increased opportunities for New Zealanders as well as tourism benefits from having New Zealand locations shown to an international audience”

Yeah, Gerry. The scenes set on Pandora were shot just out of Gore, weren’t they?

I’m not against some tax attractions for movies. I know we have to compete because everyone gives film tax breaks and it can move countries much more easily than other businesses but it just seems excessive.

It is assumed that the Large Budget Screen Production Grant helped Weta to become the world-leader in special effects that it is and brought lots of business here . But it turns out it is far from clear that the benefits to the country outweigh the cost becuase the films would have come to Weta anyway – it’s not like James Cameron was spoilt for choices of companies that can do cutting edge special effects. At any rate, I would have thought Weta was now in a position where it could largely stand on its own two feet. 

At least, the hand-out from the taxpayer could be smaller. I mean, they spend $300 million here and we give them a 15% kickback? Gee, I’m sure some New Zealand exporters would love that kind of assistance. Or, perhaps, there could be some percentage deal to recoup some of the money from the film’s box-office takings if it exceeds a certain amount. It seems pretty crazy that a film which has grossed $2 billion in five weeks got money from any government.

PS. Where’s James of Editing the Herald when you need him: “Avatar recently won big at the Golden Globe awards and is on track to be the biggest grossing movie of all time, having sold more than $1.6 billion of tax credits.” It has said that for 22 hours at the time of writing. Does no-one from the Herald read the Herald?

43 comments on “Subsidising Pandora’s box-office ”

  1. tc 2

    Trev continues to show everyone that he passed his ‘use by’ date during their last term in power……..RWC Stadium was a chance to redem himself……..FAIL.

    I hope he’s packaged off along with King as the albatrosses they will be in 2011.

  2. Lanthanide 3

    “Yeah, Gerry. The scenes set on Pandora were shot just out of Gore, weren’t they?”

    Obviously Gerry was talking about big-budget films in general, not Avatar specifically.

  3. The Baron 4

    I don’t get you, Eddie – this is all about creating and supporting a new, high-tech, clean and green, well paid and lucrative industry for the country. It builds off the support that the Labour government extended toward the Lord of the Rings trilogy, and has further enhanced our national image in this regard.

    $45m for those sort of benefits seems like a pretty good return to me. So, ah, whats the problem?

    • Eddie 4.1

      The argument is that the benefits could have come with a smaller or no subsidy. Not hard to understand.

      You should check out the MED doc I linked to

  4. burt 5

    Eddie

    I agree there are some issues to discuss here. There are up sides and down sides to govt picking the winners and losers for tax breaks and an open discussion needs to be had about it.

    I would also like to point out that this is not new under National so perhaps there are some people in your camp that could shine some light on why it was a good thing when The Lord Of the Rings was being made; I suspect the same reasoning that was applied then is probably applicable now.

    see: The Lord of the Rings: The Return of the King

    The amount of money that New Line reclaimed in tax breaks on the 3 “Lord of the Rings” films was ten times more than the entire annual budget of the New Zealand Film Commission, which funds local film-making.

  5. BLiP 6

    I wonder how many parents could have tended to their disabled children for $45 million. Still, with National Ltd® its priorities, eh?

    • Disengaged 6.1

      I wonder how many people have sustainable careers now because of the $300m in benefits New Zealand received from this film and the New Zealand film industry in general? It’s good to see National carrying on with a forward thinking scheme established by labour.

      • BLiP 6.1.1

        Given National Ltd®”s inability to understand its own figures, are you able, please, to provide a source for your $300 million. I’d be interested to see the data set, consider the assumptions and test the conclusions.

        • spot 6.1.1.1

          Presumably qualifying production costs = some $300m if the grant comes in at $44m and LBSPG rate is 15%.

          Or thereabouts.

        • Disengaged 6.1.1.2

          Well to receive the grant the film company has to provide audited figures outlining their eligible expenditure in New Zealand. This is then verified by the IRD before payment. So unless you think that the NZ Film Commission, MED and the IRD are all in some secret collusion with John Key and the VRWC then I’m willing to believe the figures released.

          I’m sure it also used the same method for calculating the $363 million direct cash injection into the New Zealand economy, additional economic activity of $119 to $227 million; and indirect benefits ranging from $10 million to $34 million from the production of Narnia here.

          Source: http://www.med.govt.nz/templates/Page____17609.aspx

          • BLiP 6.1.1.2.1

            Ta.

          • Eddie 6.1.1.2.2

            disengaged, read a little lower:

            “Overall the economic evaluation released today estimates the net economic impact of the scheme lies between a $33 million net gain and a $38 million net loss.”

            The grant rate is 12.5%, btw

            • BLiP 6.1.1.2.2.1

              As I thought . . . more Tory bollocks.

            • Disengaged 6.1.1.2.2.2

              Read even lower Eddie:

              “”However as the evaluation notes, some benefits and spin-offs have not been quantified, the sample size is small, and timeframe for the evaluation was only two years, which suggests the evaluation should be treated with caution,” Trevor Mallard said.

              “The fact these benefits were not quantified indicates that the economic evaluation is conservative and probably underestimates the overall benefits of large budget productions to New Zealand.”

              Benefits that were not quantified included the goodwill the scheme generates with screen producers, and the value of the international reputation New Zealand is developing because of its success with large-scale productions.

              The evaluation did not quantify the value of additional infrastructure and industry development and spin-offs such as set construction, transport logistics, graphic design, accommodation and catering.

              “In addition, the benefits of film productions can spill over into other sectors, for instance with the up-skilling of the digital sector, and the growth in tourism that we have seen as a result of the Lord of the Rings trilogy.

              “Such benefits cannot be readily quantified, but would increase the net economic benefits of the grant.

              “I am confident that there is enough evidence to suggest the grant is an effective tool in attracting large screen productions to New Zealand, and that the benefits outweigh the costs. As a result the government has decided to continue the grant in its present form, with on-going monitoring.”

              Oh, and the Grant was increased from 12.5% to 15% in 2007 according to Film New Zealand
              http://www.filmnz.com/production-guide/incentives/large-budget-screen-production-grant-scheme.html

  6. Scott 7

    It sucks having to subsidise Hollywood, but the other option is to not do so and not get the big films.

    The film industry is thriving in this country because of these big budget films. And other countries have tax incentives. If we withdrew ours we’d probably see much fewer of these films being made in NZ. If you look at the amounts spent in NZ to make these films and then factor in the benefits to NZ that are harder to measure (e.g. tourism, the growth of high tech industries), I think it’s still a good deal

    We can all think of other things we’d like to do with the $45m, but I’m not sure removing or reducing the tax incentive will make us better off as a nation.

  7. Chess Player 8

    Sorry, I can’t see what the problem is.

    • burt 8.1

      The problem is – Eddie got his fingers on the keyboard before he checked his history or his facts pertaining to special tax treatment of the film industry in NZ.

      • Eddie 8.1.1

        burt. you’re wearing out my patience fast. Either make some substantive criticism or go and make your vile misogynist and homophobic comments at Kiwiblog like this one:

        burt (3794) Says:
        January 11th, 2010 at 12:53 pm
        Has that guy who use to be PM ever been a Nelson MP?
        I heard his voice on the radio many times and saw pictures of his younger sister on billboards during elections what was his name, it was a girls name if I recall correctly but one look at his gay husband quickly made you aware he just liked to dress a tiny bit feminine . Henry Clark or something like that ?????

      • burt 8.1.2

        Eddie

        That is really funny.

  8. Nick C 9

    Its really a subtle form of protectionism, as money made by weta workshops from the people who bankrolled production of the movie would count as export revenue.

  9. Rex Widerstrom 10

    Unlike LOTR, there hasn’t been much effort on the part of Cameron to publicise the fact that the basis for Pandora is in fact NZ.

    Considering people are reportedly becoming clincially depressed upon realising Pandora doesn’t exist, the poential tourist return from Avatar might potentially exceed that from LOTR if Cameron did more to make it known.

    But I doubt he will, because he wants the emphasis to be on the CGI, not the underlying reality.

    Perhaps future deals need to include an agreed promotional component for NZ, to be undertaken by the filmmakers, in return for such a generous handout.

    • felix 10.1

      …people are reportedly becoming clincially depressed upon realising Pandora doesn’t exist…

      For serial? If so, do we really want to encourage people that stupid to come here?

      Perhaps future deals need to include an agreed promotional component for NZ, to be undertaken by the filmmakers, in return for such a generous handout.

      Agree 100%. Otherwise we’re just racing to the bottom. We have to get more out of it than just the work or we’re just an upmarket Economic Processing Zone.

      • Rex Widerstrom 10.1.1

        For serial?

        Sadly. yes.

        do we really want to encourage people that stupid to come here?

        To quote Mulder, they are already amongst us, Felix. The trick is not to interbreed 😉

  10. illuminatedtiger 11

    Topped Titanic today in terms of box office earnings 🙂 .

    • Eddie 11.1

      yeah. I hear it’s an awesome film. Still waiting to see it. No chance of getting a decent seat in a 3d screen at the moment

      • quenchino 11.1.1

        What does us tell us? The two biggest earning movies of all time, Avatar and Titanic… both directed by the same man … an amazing achievment.

        Both films broke arresting new visual ground and are deeply engaging. Both have an interesting, potentially challenging messages, heavily overlain with thick layers of mawkish sentimental emotions. And while both could have been greater movies in so many ways, Cameron took no commercial risks and aimed straight for the collective wallet of the masses.

        You have to say that the man knows how to make hugely successful movies. His formula for success is at it’s heart very simple.. emotion overides reason every time.

  11. Adrian 12

    The wine industry is struggling at the moment but it still earns the country over 1 billion dollars in exports, it pays $2.50+ in excise duty on every bottle sold in NZ ,thats about $250 million and another $125 mill in GST and doesn’t get the steam off a turd from the government. Where’s the bloody equity?

  12. We NZ used to have special tax concession for the agricuklture industry and exporters, but we gave it up because it was inequity, and led to distortions.
    I can’t see why tax is payable by some and not others.

  13. Steve 14

    What is it with the Film Industry that gives it some divine right to have these tax breaks over more deserving industries in NZL? We are mermerised by the supposed glamour and celebrity. In fact the obsession we have with celebrity in this country is astounding and it comes right from the top with our “Letterman”PM showing how agog he is with getting the right photo op. Yep, loved the shot of him sucking on a bottle which no doubt the Brit papers have had a few people shaking their heads asking what was he thinking of!

    • Chess Player 14.1

      Well, what other industry do we have in NZ that is essentially creative, knowledge-based, very low poluting, foreign exchange earning, potentially an employer of a reasonable number of people, and can sometimes showcase the beautiful scenery we pitch to the tourist market?

      If there are more industries in NZ that meet this criteria, I reckon we should be supporting those industries as well.

  14. Steve 15

    Yes, the pyrotechnics, helicopters, large trucks, mobile canteens, … all low pollutants from the film industry versus shall we say Air NZ’s innovation released yesterday which is world leading, the tourism industry which employs 1 in 4 in this country and is the largest foreign exchange earner for the country with no tax breaks although the IRD nearly wiped out many of their key distributors with unclear GST rulings last year. That’s a few billions and .5m jobs to kick off with and I think it puts the miserable $400m from the film industry into perspective. They are just another contributor with no right to anything more than the other great businesses we have in NZ.

    • Chess Player 15.1

      Steve, you seem to have a chip on your shoulder about this.

      Are you suggesting that with the govt having funded international advertising campaigns to promote Tourism for many decades, and then having to financially bail out Air NZ, that the Tourism industry has had nothing at all?

      Govt assistance can take many different forms….

  15. Steve 16

    I think you need to check the difference between chips and facts.
    With the exception of the Aussie campaign of the past 12months, give me an example of where the government has directly funded tourism campaigns internationally. The govt has underfunded tourism for years. The industry itself has done this through contributions to major campaigns, particularly Air NZ which has always been the largest contributor to tourism promotion internationally – and that’s unequivocally accepted by the tourism industry at large. The Govt chipped (there’s a good use of that word) in funding for an Australian campaign last year as I said but has not done so to any great degree over the past 20years.
    Air NZ was invested in by the govt (not “bailed out” as you say with a hint of cynicism and a couple of metres of timber particles on your epaulettes) 9 yrs ago but within 2 yrs was returning a huge dividend which continues to this day.

    Sure govt funding takes many forms but it needs to be fair and the massive tax break to the film industry is lob sided.

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  • The Inside Word: New Zealand Quarantine
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  • Hard News: ASA: Let’s not talk about this
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    7 days ago
  • This is not kind
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    No Right TurnBy Idiot/Savant
    7 days ago
  • Wokies are the establishment
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    No Right TurnBy Idiot/Savant
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  • Anyone for Collins?
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    1 week ago
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  • Tax cuts for all!!! (except you, you, and you)
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    1 week ago
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  • New Zealand has role to play in resolving crisis on ‘geopolitical fault line’, Helen Clark says
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  • Euthanasia referendum: How to cut through the emotions
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  • Why we need cameras on boats
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    Democracy ProjectBy bryce.edwards
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  • Opportunistic looting
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  • Uncomfortable Choices.
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  • Talking tax: How to win support for taxing wealth
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  • Media Link: Nuclear strategy, then and now.
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  • Job numbers up in August
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  • Māori development receives funding
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    BeehiveBy beehive.govt.nz
    18 hours ago
  • Hand-up for owners of earthquake-prone units
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    BeehiveBy beehive.govt.nz
    21 hours ago
  • PGF backing successful Māori enterprise
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    BeehiveBy beehive.govt.nz
    1 day ago
  • Hokitika Landmark earmarked for $22m restoration
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    3 days ago
  • Town halls and war memorials in PGF renovation programme
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    3 days ago
  • Minister of Foreign Affairs makes two diplomatic appointments
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    4 days ago
  • NZ’s most prestigious conservation award – Loder Cup presented to Graeme Atkins
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    4 days ago
  • Early help for whānau who need extra support
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  • Parliament to install solar and cut carbon
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    4 days ago
  • Tuvalu Language Week theme promotes community resilience in the face of COVID-19
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    4 days ago
  • International sport back up and running in New Zealand
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  • 1BT funds for Northland forest taonga
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    4 days ago
  • Better health care for West Coasters as Te Nikau Hospital officially opened
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    4 days ago
  • Government backing local with PGF loan
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    4 days ago
  • Primary sector exports and jobs up again
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    5 days ago
  • Clean energy future for more schools
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    5 days ago
  • Building business strength with digital tools
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    5 days ago
  • New pest lures to protect nature
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    BeehiveBy beehive.govt.nz
    5 days ago
  • Support for innovative Pacific education responses to COVID-19 needs
    Supporting new and creative Pacific education practices as part of our COVID-19 response and recovery is the focus of a new $28.5 million Pacific Education Innovation Fund announced today by Associate Minister of Education Jenny Salesa.  “There is already an incredible amount of innovative and creative work going on in ...
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    6 days ago
  • Eligibility expanded for COVID-19 leave support
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    7 days ago
  • Seasonal work visa available to more people
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    BeehiveBy beehive.govt.nz
    7 days ago
  • More border exceptions for critical roles
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    BeehiveBy beehive.govt.nz
    7 days ago
  • Crown will not appeal Dodds v Southern Response decision
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    7 days ago
  • Crucial PGF investments for Northland
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    BeehiveBy beehive.govt.nz
    7 days ago
  • $27million investment in global vaccine facility
    The Coalition Government has committed to invest $27 million in COVID-19 vaccine development through the global COVAX Facility, Foreign Minister Winston Peters announced today. “The COVAX Facility is a key part of our COVID-19 Vaccine Strategy to obtain safe and effective vaccines. It allows us to invest in a high-quality, ...
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    1 week ago
  • Government backing Māori landowners
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    1 week ago
  • New tools to make nature more accessible
    People planning to head outdoors now have a resource that lets them know how accessible an area is for people with varying levels of mobility, Minister of Conservation Eugenie Sage announced today. The Halberg Foundation, Sensibel, and the Department of Conservation (DOC) have launched Accessibel, a new tool which helps ...
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    2 weeks ago
  • PGF makes Māori history more accessible
    One of the most significant battle sites of the 1860s Land Wars will receive $2.96 million from the Provincial Growth Fund to improve the site and help tell the New Zealand story to visitors, Māori Development Minister Nanaia Mahuta and Regional Economic Development Minister Shane Jones have announced. Nanaia Mahuta ...
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    2 weeks ago
  • Making it official: The journey of te reo Māori | Kia whakapūmautia: Ngā piki me ngā heke o te r...
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  • Better-than-forecast GDP reflects decision to protect New Zealand
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  • Boost for COVID-19 related Pacific education needs
    The Government is investing $39.7 Million over four years to support the educational needs of Pacific learners and families in the regions hardest hit by COVID-19, with Auckland getting an immediate boost, Associate Minister of Education Jenny Salesa says.   “Like all New Zealanders Pacific families want learners to do well ...
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    2 weeks ago
  • More resources for kiwi conservation
    New Zealand’s goal of 100,000 kiwi by 2030 is being helped by an extra $19.7 million in funding to accelerate iwi and community efforts to protect kiwi, Minister of Conservation Eugenie Sage announced. “$19.7 million of Jobs for Nature funding is being invested in kiwi conservation activities including increased predator ...
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  • Improving access to affordable electricity
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    2 weeks ago
  • Government achieves 50 percent women on state boards
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  • Record transport investment to help economic recovery and save lives
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  • Advancing clean energy technology
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  • Major milestone reached in Pike River Re-entry
    The critical area for forensic examination known as Pit Bottom in Stone has been reached in what is a major milestone for the Pike River re-entry project, Minister Responsible for Pike River Re-entry Andrew Little announced. “The infrastructure located in Pit Bottom in Stone is of very significant interest in ...
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  • Economic recovery guides Govt response to retirement income policy review
    The Government is working on how New Zealand’s retirement income policies and settings can best support Kiwis in light of the COVID-19 economic recovery, with the help of the Retirement Commissioner’s latest review, Commerce and Consumer Affairs Minister Kris Faafoi said. “The Retirement Commissioner’s three-yearly review into New Zealand’s retirement ...
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  • Iwi community hub opens in Murupara
    A new digital hub and development centre in Murupara will be instrumental in growing the region’s productivity, said Under-Secretary for Regional Economic Development Fletcher Tabuteau at the official opening of two community initiatives today. “I’m pleased to be here celebrating a significant milestone for two projects set to make a ...
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