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Treasury warned on risk of Hobbit hustle

Written By: - Date published: 12:00 pm, December 2nd, 2010 - 11 comments
Categories: business, capitalism, film - Tags: , , ,

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?


11 comments on “Treasury warned on risk of Hobbit hustle”

  1. ianmac 1

    Someone published the uncertain estimates on whether the investment brought returns or not. It ranged from about $40million gains to negative $30million. Read it somewhere a few weeks ago. The claims that it would benefit $400million were unfounded. The gains from the Hobbit were minimal. Somewhere around 3% of tourist would come because of Matamata and the Hobbits. The next 10% would visit the Hobbits while they were here just because it fitted in with their travel opportunities. (Hope I remembered that reasonably well?)

  2. Anne 2

    The whole sorry saga turned into a public relations exercise on the part of Key &co., so that they could ingratiate themselves further in the eyes of a naive and stupid public.

    A $30 million dollar PR excrecise!! (err… I meant exercise, but the typo has an element of truth to it too).

    • Jim Nald 2.1

      Is that like a new ‘blend word’ or portmanteau a la Lewis Carroll, deriving from excrement and excise?

      (I think I must shake off my recent references to human anatomy and bodily substances.)

      • Anne 2.1.1

        @ Jim Nald
        You put it better than I ever could…
        Didn’t think of ‘excise’ but that completes the tableau.

    • pollywog 2.2

      must have been why Blinglish was nowhere to be seen and was making squeaks about not bringing out the cheque book beforehand…

      …having given out a few shakedowns, he’d know one when he saw it coming and decided to wash his hands of it

      pity his boss doesn’t listen to anyone but his media handlers…

      “just smile and wave John, just smile and wave.”

  3. Lanthanide 3

    Marty – are you sure it’s $33M?

    I believe at least some of the numbers were in $US, and the amount won’t actually be handed over until later during production, or whatever. By which time the NZ $ could’ve fallen, making the figure much worse. Or alternatively the US $ could’ve fallen, making the number much better (but probably causing the film to massively blow it’s budget in the process).

  4. Ron 4

    in the end, though, we can call Sir Pete’s credibility into question over this whole fiasco.

    Another case (as is so often the case with Jonkey) of the public accepting thier words becuase they are a “nice and successful person”. Style over substance. PR and advertising over facts.

    captcha : connections

    • g says 4.1

      i agree ron. i go back to that interview on nine to noon when mrs jackson and the script writer appeared. in a fine award winning performance, in a true near to tears fashion, they portrayed the end of the project that they could see slipping away…
      followed by ms kelly who informed us that the sunday evening before this interview, warners, sir peter and the unions had agreed that the blacklist had been lifted and that warners would control the release of this information.
      it all seemed like a big beat-up and a hoax…
      forgotten silver anyone?

  5. Rich 5

    Moreover, it’s entirely possible that things will turn pear-shaped either creatively or financially and the film will never be finished. Or it could be a complete turkey and put film studios of NZ and Peter Jackson forever.

  6. Gosman 6

    ” But would this money have been more productively spent …or on teachers’ pay,”


    I believe the answer to that is an unequivacal NO.

    Where is the evidence that increasing teachers pay has a major impact on the economic fortune of a country?

  7. James 7

    “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?”

    Groan. The 33million wouldn’t exist without the 500 million investment from the film coming here anyway, so it doesn’t really matter does it. Ridiculous.

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