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Warner Bros – corporate welfare beneficiary

Written By: - Date published: 11:30 am, September 9th, 2015 - 63 comments
Categories: benefits, business, capitalism, Economy, film, Globalisation, national, national/act government, parliamentary spending, same old national - Tags: ,

Gollum2

This Government’s priorities are clear.  It sells our assets, strip mines the country’s primary social housing provider, and preaches austerity yet at the same time it blows our money on sheep farms in the Saudi desert and all sorts of corporate welfare.

One of the worst examples has received some attention recently.  Warner Bros, one of the wealthier corporates on the planet has been the recipient of significant taxpayers money over the past few years.

From the Herald:

New Zealand taxpayers stumped up a total of $191 million, via tax rebates, for the making of Peter Jackson’s Hobbit Trilogy.

The latest statements for Warner Bros Entertainment’s New Zealand subsidiary, 3 Foot 7, show the firm received a large budget screen production grant of $38.3 million in the 12 months to March 31 this year.

That adds to the $54.6 million it received in the 2014 year, $31.3 million in 2013, $46.9 million in 2012 and $20.2 million in 2011.

Across the five years, production costs amounted to around $1.1 billion, meaning the Warner Bros unit has claimed about 17 per cent of total costs under the grant.

The first two movies generated box office takings of about US$1.92 billion, according to IMDb website, and the third installment in the trilogy, ‘The Hobbit: The Battle of Five Armies’, was released in December.

The grants are one sixth of the total production costs.

You have to question the justification for the grants.  The Hobbit films have been very profitable.   The three-film trilogy cost around US $765m to produce and in February this year were estimated to have made US $2.916b worldwide.  Paying money to US corporates so they can make even greater profits seems to be a bizarre waste of money.

Would the Hobbit films not have been made here if the grants had not been paid?  If we are truly developing a world beating high tech industry and utilising our natural beauty then grants should not be necessary.  The current practice where governments throughout the world bestow benefits on corporates engaged in economic activity that is already profitable needs to be reconsidered.

New Zealand has already been taken in by Warner Bros.  Offering corporate welfare for already profitable economic activity is a poor use of our money.

63 comments on “Warner Bros – corporate welfare beneficiary ”

  1. The Gormless Fool formerly known as Oleolebiscuitbarrell 1

    But I thought we needed to diversify away from dairy. How are you going to do that without subsidies?

    • mickysavage 1.1

      We do need to diversify. $191 million could set up a number of industries and jobs. Funny that paying welfare to beneficiaries is considered to be morally wrong but if it is to an American corporate it is somehow a virtue.

      • Enough is Enough 1.1.1

        Who said paying welfare to beneficiaries is “morally wrong”. Do you have a source for that.

        Credibility is important when we are trying to argue with rabid righties.

      • BevanJS 1.1.2

        ……except the 191 didn’t exist to be used elsewhere.

    • dv 1.2

      Waner Bros hardly a startup

      • dukeofurl 1.2.1

        Next thing we will be subsidising Chinese companies who want to own NZ dairy farms………

        Wait, we are doing that now with Landcorp being the sharemilker, so as to get around OIA regulations

        • The Gormless Fool formerly known as Oleolebiscuitbarrell 1.2.1.1

          I don’t think we should have subsidised Warner Brothers. But then, I don’t think we should subsidise anyone.

          You’re all for subsidies that “create jobs” and other immeasurable bullshit. Just not this one.

          • crashcart 1.2.1.1.1

            There is a large difference between providing a subsidy to a start up Kiwi buisness and to one of the largest multi national companies in the world. If you can’t see that then you really need to take a look in the mirror.

            • Enough is Enough 1.2.1.1.1.1

              Did the LOTR and Hobbit projects have a net benefit for New Zealand?

              Would we have been better off as a country if the respective governments of the time gave no incentives to Hollywood to produce the films here?

              • Draco T Bastard

                Did the LOTR and Hobbit projects have a net benefit for New Zealand?

                Probably not.

                Would we have been better off as a country if the respective governments of the time gave no incentives to Hollywood to produce the films here?

                Hollywood has enough money to produce where-ever they choose. On the other hand, NZ’s film doesn’t. So I’d say a $500m fund to produce NZ written and made blockbusters is probably a better option than subsidising Hollywood.

                • Bob

                  “So I’d say a $500m fund to produce NZ written and made blockbusters is probably a better option than subsidising Hollywood”

                  You seem very confused Draco, what was offered was a tax rebate, i.e. they got to claim back part of what they owed the Government in tax, the Government made a concession, they didn’t subsidise anything. Before you call that semantics, what you are suggesting is you give me $500M to make a film, as apposed to, if I give you approx $300M (my guess based on PAYE, GST and Company Tax payments) you will give me approx $191M back.
                  The same scheme for NZ written and made blockbusters, as you put it, would mean the NZ companies would still need to find funding of around $2.5Bn themselves based on the figures above ($191M tax rebate on a $1.1Bn investment).
                  I personally would have no problem at all with the same deal being offered to NZ based productions.

                  • Draco T Bastard

                    Government made a concession, they didn’t subsidise anything.

                    If it’s not available to other companies then it’s a subsidy. Now, as you can probably tell from my suggestion of $500m per year from government to NZOnAir to fund NZ people/companies to produce blockbusters I’m not against subsidies. What I’m against is subsidies to foreign companies. If I, as a NZer, am going to subsidise anyone then it should be other NZers.

                    I also think that the NZ government gets some of the profit as well and not just the taxes. If NZ had got 1/6th of the profit from Warner Bros for that subsidy then the government would have had an income stream that would have netted ~$300m plus by now and it would be ongoing.

                    The same scheme for NZ written and made blockbusters, as you put it, would mean the NZ companies would still need to find funding of around $2.5Bn themselves based on the figures above

                    I want to make enough funds available to produce the blockbusters without further funds being necessary. This grows the industry in NZ by giving it enough of a support base to do so.

                    At $500m funding per year I would expect at least three and probably as many as five on the go at any one time.

    • Tracey 1.3

      You mean the only industries that survive are subsidised?

      • The Gormless Fool formerly known as Oleolebiscuitbarrell 1.3.1

        No. I think the opposite. If you can’t survive without a subsidy, you shouldn’t be in business.

        • Draco T Bastard 1.3.1.1

          But Tracey is actually correct – businesses pretty much need to be subsidised to survive.

    • meconism 1.4

      If your business has to be subsidised to be profitable it isn’t a business, it is a hobby and you should pay for it yourself.

    • Majic Mike 1.5

      At $1 million per temporary job makes sense.

  2. Citizen's Resistance 2

    The influence of multi /National Corporations in Government is shocking. We must rally together and expose what is really going on between big business and the National led Government.

    Here is another case in point, so much for looking after the local community business Stephen Joyce;
    http://www.nzfirst.org.nz/news/northland-business-axed-foreign-corporate-giant-gets-privileged-deal-national

    “Stop The Rot Get Corporations Out Of Government.”

  3. David Scott 3

    Getting those films made here was nothing less than corporate extortion – an example of powerful business forcing our hand. What we should be doing is saying: if you want to do business here, it is on our terms. If you don’t, go elsewhere.

  4. infused 4

    They didn’t receive any money…

    learn2tax.

    Look at what its done to the tourist industry. I’ll let you dig the figures up since you’ve opted to leave them out of this, which I expect is on purpose as it would shit all over your post.

    • mickysavage 4.1

      Que?

      Read the post. I said they received $191 mil in tax rebates.

      Good on the films for doing good things for our tourist industry. Doing good things is not a reason for people or corporates to pay less tax.

      • infused 4.1.1

        So if those grants were not given, and the films were never filmed here, you’d be quite ok with that?

        • dukeofurl 4.1.1.1

          Its really all about how many ‘new jobs’ came about for that money?

          100 or 200 maybe, but look the jobs arent sustainable for a long period, as more money is required for the next 5 years for around 200 jobs

          • infused 4.1.1.1.1

            You actually need to go and look at the economic impact…

            And all the Weta jobs were sustained. I have quite a few friends who work there now.

            • Citizen's Resistance 4.1.1.1.1.1

              Yes good idea let’s have a detailed look at the economic impact on our democracy, the association between the New Zealand National Party and donations by the Corporations.

              Their vehicle of Trusts and the rort of the Cabinet Club. Nothing is more true than the saying “who pays the piper calls the tune” disgracefully illustrated recently with the sham health and safety legislation Talley’s and their ilk influenced upon us.

              • Nessalt

                Yes, lets look at a report that specifically addresses the charges levelled by mickey in the original post. not some tangential report that deals only in tangential arguments that is purely of a party political nature.

                • mickysavage

                  OK there is this one produced by Joyce’s office (http://www.mch.govt.nz/sites/default/files/Review%20of%20Government%20Assistance%20to%20Screen%20Sector%202013%20Cabinet%20paper%20(D-0493018).PDF) which says:

                  The evaluation concluded that the Large Budget Grant has generated small net economic benefits …
                  Using conservative assumptions, the evaluation concluded that the Large Budget Grant has generated economic benefits of $281.9 million (including $100.1 million additional tax revenue) at a net fiscal cost of $168.2 million over the evaluation period.

                  We normally do not build roads if the benefit is this marginal.

                  And hey I heard all the film people saying that this was a great thing. They have a very personal interest in this. I would prefer we used the money on indigenous start ups than an American multinational.

        • Tracey 4.1.1.2

          Can you point to evidence that but for those grants the films wouldn’t have been shot here?

          • BM 4.1.1.2.1

            Can you point to evidence that says that the films would have been shot here regardless?

            • Tracey 4.1.1.2.1.1

              Sorry? Infused is making the claim. But yes I can point to documents that the films weren’t going to leave. It is in the public arena. Brownlee lied and so Jackson knew it wasnt in danger.

            • mickysavage 4.1.1.2.1.2

              Well before contributing $191 million of our money I would hope the Government would have this evidence.

            • North 4.1.1.2.1.3

              Can you point to evidence that says they wouldn’t have,
              B-eeeeee-M (me up scotty) ?

              Oh yeah…..sorry…..the Ponce Key and Brownlee ‘said’ so…..and ‘Sir’ Jackson had a hissy fit.

      • Enough is Enough 4.1.2

        From someone who dislikes what this government stands for, I appreciate what was done to secure this project that employed my brother for 18 months in an industry where work is very difficult to find in New Zealand.

        We, the New Zealand taxpayer, stumped up nothing. We gave back 25 cents of a dollar we wouldn’t have earned in the first place if these movies hadn’t been made here.

        Plus, the return to our economy goes far beyond just tourism. These movies spend a large percentage of their budgets here in New Zealand on services, goods and they employee literally thousands of people.

        If the media wants to expose a business that earns huge profits off kiwis and channels those profits offshore with little or no benefit to the local economy, I suggest they take a look at our foreign owned banks. They’ve been ripping us off for decades.

        • Bob 4.1.2.1

          +1
          Emotive lines like “Warner Bros, one of the wealthier corporates on the planet has been the recipient of significant taxpayers money over the past few years” by MS are a complete misrepresentation of the facts and don’t take into account the tax we did receive (that we may not have), the jobs secured during the heights of the recession, and the tourist boom in areas like Matamata which have no doubt contributed to NZ’s record levels of Tourism that we are now experiencing (4M tourist in the last 12 months I believe?).

        • tc 4.1.2.2

          They were always going to be made here regardless of the tax rebates.

          Jackson, Warners and Key took their opportunity with the skill of experienced dream chasers to get some tax relief with a bunch of porkys about making it somewhere else.

          The MSM just replayed the govt spin lines to help con the sheeple. Hobbiton was always going to be in matamata etc etc.

          it’s called continuity as it’s a lord of the rings prequel and jacksons too good a director to risk having it done elsewhere.

          • Draco T Bastard 4.1.2.2.1

            +1

          • Mike S 4.1.2.2.2

            Yep correct 100%

            These movies would have been made here regardless. Jackson and Warners were simply ‘negotiating’ (I could think of another word to call it) to secure more profit for the producers

          • mickysavage 4.1.2.2.3

            Amen. Some say that without the extra $ the Hobbit would not have been filmed here. TC properly asks for proof of this.

        • Tracey 4.1.2.3

          do you believe the film wouldnt have been made if the employment law hadn’t been changed?

          But EIE my (fill in a relative) works for a bank… so it’s ok.

    • BM 4.2

      Yep, you should go to Matamata, the place is just humming with tourists.

      Thank god, we’ve got some one who has the ability to see the big picture running NZ, instead of some tunnel visioned union puppet.

      • dukeofurl 4.2.1

        Oh really.
        Just look over the total tourist numbers, can you pick out the ‘hobbit effect’ when even the RWC was hard to notice when it was here for a short period.
        There will probably be a pick up in tourists over our summer as the weak kiwi dollar makes it more affordable for US and Europe.

        Otherwise tell us what, numbers of the 3 mill tourists have come specifically for a farm in matamata ?

      • Tracey 4.2.2

        Hmmm National made the LOTR possible? Really? You should meet Steve Wrathall, he gets his facts out of his arse too.

      • Tracey 4.2.3

        Hmmmm so the Matamata site was only constructed for the Hobbit movies, not the LOTR Trilogy BM?

        • BM 4.2.3.1

          The LOTR set was made from custom wood and other non-permanent materials

          As crazy as it seems, people traveled to the other side of the world to look at a hole in a hill.

          Which was why they thought the hobbit was going to really ramp up the tourism, there was actually something for the tourists to see.

          • Mike S 4.2.3.1.1

            Isn’t it crazy that the plywood and mdf used in the sets was probably made in China from New Zealand grown logs and then sold back to us at a huge markup

  5. This makes Muldoons think big schemes pale into insignificance.

    Meanwhile the little people get screwed.
    Bloody creepy Government.

  6. Tiger Mountain 6

    “The Hobbit Enabling Act” was if nothing else an accurate legislative title, it “enabled” union busting the film industry

    –“but we’re different” squealed a number of people in the “who you know” film and commercials industry as they get pestered by notices for GST and ACC as a contractor status when they are clearly employees, jeez even Lord Jackson has union membership!

    in retrospect so many people should be ashamed of themselves in reducing an always difficult employment area to true munter status–stand up, fight back!

  7. Tracey 7

    very good set of articles regarding the Hobbit dispute here for those who want to get the full (ish) picture.

    http://www.nzjournal.org/NZJER36(3).pdf

  8. Coaster 8

    The hobbit trilogy was crap anyway, nothing like the book.

    • millsy 8.1

      I think Jackson was obsessing over trying to tie the story line into LOTR, instead of letting it stand on its own.

      The movies were watchable, but I think the world was over Middle Earth.

      I note that the whole trilogy never got a single Oscar.

    • Tiger Mountain 8.2

      Lord Jackson is operating on self induced flatulence these days after being the nation’s “hero” during the LOTR years

      history will fairly view him as a downunder version of a megalomaniacal Hollywood mogul

      he plundered a classic slim volume, kids and parents favourite, to wring 3 features worth of box office returns rather than go for one worthy film in honour of Tolkien’s book

  9. Rapana 9

    Housing New Zealand Corporation made $190 million profit off state house tenants. This is whilst people died due to mouldy homes. Meanwhile Warner Brothers gets $191 million. It’s almost as if HNZC tenants directly subsidised Warner Brothers.

    • Smilin 9.1

      You aint wrong mate and how do we balance the moral book on that ? Wait for Jesus or kick this fascist govt to kingdom come

  10. vto 10

    “Across the five years, production costs amounted to around $1.1 billion”

    Horseshit it did. I recall a couple years ago the number was 0.75billion, and even that was laughable. Check what is included in that number and where it is spent – it is the colossal deception.

    shave it in half or more

    • Majic Mike 10.1

      1.1 billion of which how much was spent in New Zealand.
      $350 million govt spent on LOTR
      $190 million on the Hobbit.
      That’s probably what was spent in New Zealand on making these movies.
      Or that’s approximate wealth of Peter Jackson .

  11. Smilin 11

    And Shakespeare wrote his on paper fuck this propaganda machine I bet we all remember some SHAKESPEARE but do we really remember any of this film shyte its all been gone since James Bond
    And fuck you KEY you prick

  12. Thinker 12

    Here’s an idea from a somewhat different view. Just another opinion.

    We’re told that the Warner Bros subsidy was justified because it created spinoff benefits and some respondents to this clip wonder how that could be, or if it really was justified.

    Many countries have used direct or indirect subsidy schemes to that country’s advantage, and I wonder if our current negative opinion of them is partly a legacy of new-right economics and its mantra of “Free Market Good, Government Intervention Bad”.

    Right now, we seem to have an unusual circumstance where a right-leaning government is actually saying there are times when industry subsidies are a good thing, and that they can and do work.

    Quite a few years ago, someone did a study called Upgrading NZ’s Competitive Advantage and it identified sectors where NZ would have an advantage on the world’s stage. The book was lauded for a short while, then quietly forgotten. If memory serves me, that book also suggested the government should find ways to give those selected industries a leg up, presumably by some kind of subsidy or tax break. I bet some public libraries still have copies.

    So, maybe we should consider judiciously rolling the successful subsidy model to some home-based companies, which need leverage from the benefit of a few year’s tax break to get them started and which would then have a competitive edge – particularly exporters. They would employ people and use other local firms and there could be both direct and indirect benefits.

  13. save NZ 13

    Don’t forget our armed defenders defending the ‘threat’ of Kim Dotcom who might be threatening WarnerBros profits by having a better file website than they do. I always thought that civil cases should be made by the people in disputes but now thanks to our US comrades our entire defence force can be out throwing NZ citizens in prison with trumped up charges, increasing those charges to justify their over the top reactions, getting our TV networks to fly around the world to stump up bad PR for him, and ultimately stalk IT start up personal around the world to testify against him in return for reduced charges. Hmmm now that is a beat up.

    How much corporate welfare and tax payers money has gone into what should be a civil court case and nothing to do with the NZ government? I would say millions.

  14. save NZ 14

    I’m also concerned our employment rights are up for negotiation for any foreign nationals. Don’t want to pay employ benefits or give them any rights? No problem says John Key, we can change the law for our ‘special’ friends just like with Warner Brothers.

    I don’t mind the subsidies as much as objecting to using our defence force and prosecution to defend Big media interests, against a little player (Dotcom) and also them being able to change our employment law permanently for the Hobbit.

    The reality is that if Warners wanted Peter Jackson to do the film they had to do it in NZ. That is because Peter Jackson did not want to move his studio, so the government deal was free money to big business at the expense of the NZ employee and taxpayer.

    With the Dotcom saga. Is that encouraging competition? If Warners sends some little firm a legal letter saying your users are breaching their copywrite and they are coming after you?

    After the prosecution of Dotcom I would guess any business getting that letter is gonna be s*&t scared and will be terminating their business before government defence forces slam them in prison before their trial and take their assets and spy on them.

    And that is clearly anti competition, stunting innovation and stunting new technology and the digital economy and hurting smaller countries like NZ.

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