By Bernard Hickey
20th Century Fox and James Cameron have agreed to spend at least NZ$500 million to make the next three Avatar movies in New Zealand after the Government agreed to increase the rebate for foreign movie productions to as high as 25% from 15%. This implies a Government subsidy of around NZ$125 million to get the three movies made in New Zealand.
Prime Minister John Key and Economic Development Minister Stephen Joyce made the announcement at an event in Wellington with Cameron, Producer Jon Landau and Twentieth Century Fox Film co-President of Worldwide Theatrical Marketing and Distribution Paul Hanneman.
“This is excellent news for the New Zealand screen industry. The Avatar sequels will provide hundreds of jobs and thousands of hours of work directly in the screen sector as well as jobs right across the economy,” Joyce said.
“They will be a very big boost to the screen industry while we look to develop more New Zealand-sourced productions," he said.
The deal comes with the Government's announcement of a plan to increase the baseline rebate for such large productions to 20% from 15% and to offer a further 5% to those that provide extra benefits to New Zealand.
A Memorandum of Understanding (MOU) signed between the Government and 20th Century Fox provided for:
1. A commitment by both parties to grow the screen sector in New Zealand and to building a long term and productive relationship between the Crown and Lightstorm/Twentieth Century Fox.
2. Spending of at least NZ$500 million on production activity in New Zealand, including most of the live action shooting and visual effects.
3. Employment and skills opportunities for New Zealanders, including in Head of Department roles, with around 90% of of live action crew expected to be New Zealanders. An internship programme would also be supported.
4. New Zealand hosting at least one official red carpet premiere, and a featurette on New Zealand being included in DVDs and Blu Rays.
5. Cameron and Landau would serve as founding members of a new screen advisory board to New Zealand screen and film makers looking to succeed internationally.
6. Marketing and promotion of New Zealand and its film industry alongside the three Avatar films, transferring technological know-how to New Zealanders, and retaining screen production infrastructure in New Zealand that could be used for industry training.
'Grow mid-sized productions'
Elsewhere, Arts, Culture and Heritage Minister Chris Finlayson gave more detail on the changes to the subsidies for large film and television productions.
Finlayson said the changes were designed to encourage the growth of mid-sized New Zealand-based productions, while also increasing the competitiveness of international productions in the short to medium term.
Finlayson said a new consolidated fund would provide an internationally competitive incentive of 20% of qualifying costs of international productions made locally, with a further 5% available "where productions can demonstrate significant economic benefits and activities to strengthen the local industry."
Medium-sized productions (between NZ$15 million and NZ$50 million) which feature New Zealand content and significant local creative control would qualify for more support than previously.
“These changes will help ensure a screen industry that is more sustainable, brings greater long-term economic benefits to New Zealand, and avoids the peaks and troughs that are solely dependent on large international productions,” Joyce said.
“New Zealand is recognised internationally for our world-class expertise in making quality film and television. Our screen industry has grown significantly over the 15 years and is an important contributor to our economy and to our international profile. New Zealand has a lot to offer with a skilled and capable workforce, flexible employment laws, proven expertise in post-production, natural scenery and competitive labour costs."
Joyce acknowledged a sharp downturn in recent months in international production activity in New Zealand for both film and TV. "This is due to a combination of factors, including increasingly generous grant rebates and tax relief offered by other countries," Joyce said.
Here's the details
From April 1 next year the Large Budget Screen Production Grant (LBSPG) and Screen Production Incentive Fund (SPIF) would be combined to form a single scheme called the New Zealand Screen Production Grant (NZSPG). It will be uncapped.
The existing rebates of 15% for the LBSPG and up to 40% for the SPIF would be replaced by two rebates: 20% (plus an extra 5% for productions that meet extra criteria) for international productions; and up to 40% for New Zealand productions.
To gain an additional 5 per cent rebate, applicants would have to meet a points test relating to "significant economic benefits."
For New Zealand productions, a two tier system would be created. ‘New Zealand productions’ means productions with very high New Zealand content, such as a New Zealand story and a high level of New Zealand creative control. Local productions of up to NZ$15 million would have to gain a certain number of New Zealand content points test to gain the 40% rebate, payable as a grant.
For New Zealand film and television productions for between NZ$15 million and NZ$50 million support would be provided as an equity share as opposed to a grant and be subject to scoring a certain number of points on a points test relating to business as well as cultural factors.
'Indirect economic benefits'
Later in the announcement, a Questions and Answers section of the minister's announcement said the screen sector produced a range of "unique direct and indirect economic benefits to New Zealand."
"These include lifting the international profile of New Zealand on the world stage, and attracting more tourists and other people-to-people linkages. This profiling of New Zealand provides benefits to other industries and the country generally," Finlayson's office said.
"These changes will encourage New Zealand’s screen industry to become more adept at taking advantage of this dynamic and rapidly changing environment and become more entrepreneurial," it said.
The overall budget cap of NZ$63.5 million over five years was being replaced by an uncapped provision and caps on individual productions were being increased to NZ$20 million (40% of NZ$50 million QNZPE). This will allow larger-budget New Zealand screen productions to access funding. Because the new provision is uncapped, productions of all sizes will have an equal opportunity to qualify for funding, i.e. smaller-budget productions will not be crowded out by larger-budget productions.
Political reaction
Labour Arts Culture and Heritage spokeswoman Jacinda Ardern said the announcement was a much needed lifeline to an industry in crisis, although it would be too late for some.
“Labour had already announced that it would lift the incentive regime. The Government only acted when world-class post-production facilities started closing their doors," Ardern said.
She said Labour would now look at the detail because little had been said about changes about the criteria to qualify for the rebate.
“We have the opportunity to build a regime that is not focused on one big budget movie at a time, but that works for the whole industry, and across the whole country. To do that, the Government must now consult with local industry players, especially those in Auckland."
(Updated with more detail, comments, reaction)
28 Comments
A kick-back does not come cheap in this country. Especiall;y for entertainment.
We have to borrow again to get screwed with more debt.
Rugby is a game of two halves, one winner, and lots of losers.
The haves and the have nots.
Rich pickings for some, the bill for the others.
The New Zealand penchant for high living at the expense of the many, knows no bounds.
Even the UK spent 500 million of Charity money, it can never pay back, on an Olmypic Games.
And a movie is just another distraction, from what is really going on.
Money talks. It is called bribery.
Just as is a Rugby World Cup and an Americas Cup and a real treat for the boys, a monumental funeral.
Crony capitalism, cannot fail, when spending other peoples money.
Debt defying leaps, knows no bounds.
Hiding the can kicking down the road, of maths destruction, as someone once said.
Still sport should be encouraged, that is after you have had your 3 squares a day.
And a film is a fleeting distraction from the truth. A feast or a famine.
Someone has to pay the bills, seems better to offload it amongst the crowd, not come up with the loot..........yerself.
But the local film industry will suffer the consequences of our charity, as well as bear their share of the taxes, that will bare the brunt of a quarter of the costs, for Avatar and Avatar, amen.
They do like to play around and entertain themselves, with your hard earned loot, these politicians.
You voted for em. Cannot think why.
Funny money. Not laughing, nor entertaining.
An extra at the film, you will pay again to see, that you already paid for....and a world of debt, to watch all these men make fools of us all.
Strange, but true.
A kick-back does not come cheap in this country. Especiall;y for entertainment.
Certainly not.
"The bottom line here is do you want ultrafast broadband - in my view: absolutely you do. That means that every school, every hospital and three quarters of New Zealand homes need to be wired up with fibre."
Key said that if New Zealand wanted to leverage off the Avatar series of movies, and make sure the world perceived New Zealand as a highly developed first-world economy, "you need first world technology".
"The Commerce Commission has thrown a curveball at Chorus and now we need to find a pragmatic way through that. That's why Crown Fibre Holdings will go through a negotiation period with Chorus," he said. Read more
Talking of curveballs, how do 25% of NZ homes get by without UFB that is absolutely necessary in someone's mind?
Having worked in the computer industy all my life, it is an obsession that most people crave.
Keep taking the tablets, Harvey Norman. an Apple a day,helps you work, rest and play.
Mostly to play games and game others.
You need UFB to trade the New Zealand dollar, up, down, round and round.
Any nanosecond late and it is too late. Sell short, borrow long. Leverage up, Leverage down. Twist this sell that.
But as most of the farmers rely on Fonterra, to play their games for them, it is hedge this, short that.
And as any fool can tell you, it is oil this, gelt that.
Or any goldbug or silversmith will tell you, plate this, sell that.
Or as any government and IRD jockey will tell you, tax this, GST that.
And as as any Treasury genius will tell you, OCR this, but tell em that.
Or as any importer will tell you, lie, like a trooper, Holden and fold em.
Or an exporter, sucker you, sucore them Chinese babies, mamasan.
Or a bank, credit this, skim that, mortgagee this, mortgage that at a lower fractional reserve rate, so the suckers will suck, some more, by the way, you need insurance with that, a new credit card, goldplated, just sigh-n here.
Or for the newby unwary, just 10% deposit, will buy you a Mcmansion over priced and over here, on a flood plain, earthquake zone, never leaks, never rains, never shakes, global warming, whats that, nah keep playing them computer games, we gotta APP for that eventual-ity.
(And you can blog tilll ya drop, email, and you can have all these free TXTs, in the meantime, they chorus).
Wanna free Mcdonalds with that and a crap TV. Free as a bird. gotcha.
Interest free loans, payday loans.
All in a nanosecond.
Eh John.
So why the hell do you keep flitting round the world, when you could skype.
A rebate is a wonderful thing.
If someone wants to bring hundreds of millions of dollars into New Zealand, and they want a small piece of that back... where is the problem with that?
The film industry is quite unique. People come here, to take pictures. Along the way they employ local crew, spend money on planes, rental cars, hotels, restaurants and with hundreds of local small and medium sized businesses.
They don't drill into the ocean to extract oil. They don't carve up the landscape for mines. They don't pollute the waterways for dairy, and they don't deplete the fishing stock and kill endangered species.
It's a pretty phenominal industry that fits in very well with New Zealand's clean/ green identity. It's a shame that there are not more industries like it and I believe that we should be doing all we can to grow the screen sector.
It's a pretty phenominal industry that fits in very well with New Zealand's clean/ green identity. It's a shame that there are not more industries like it and I believe that we should be doing all we can to grow the screen sector.
I guess it depends how easy one can turn a blind eye:
Hobbit emails show Jackson’s dodgy dealings
Would it count if I did?
And here is another link re: The Avatar lolly scramble:
Key hailed it as "a great Christmas present for those involved in making world-class movies".
But that was not how Treasury officials saw the Hollywood sweetener.
Cabinet papers show the officials argued against the more-generous screen subsidies, claiming the current ones already offered poor returns and benefits.
Competing with other countries to offer more-generous perks for the film industry was not good economic development policy, they said.
Economic Development Minister Steven Joyce said the Treasury's view did not take into account the importance of building New Zealand's international profile.
"Every now and again we have to put our hand up . . . to show that we are worthy of the attention of the world." Read more
Burnishing John Key's absent international image has taken a step to far.
Indeed, expect to see backhanders to global media next: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11170860
None of that is at all relevant to your second link above, which is to an article which sets out what PETA said and what Peter Jackson said about allegations of ill treatment of animals during filming of The Hobbit - and which reflects a great del worse on PETA than it does on Peter.
As for the more substantive point. It absolutely sticks in my craw to have to offer tax sweeteners to highly profitable companies to get them to bring business here, rather than winning the business solely on New Zealand's own very considerable merits as a film making location. It's absolutely true that competing on the basis of subsidies is a mug's game likely to be damaging for all concerned.
But the fact is that New Zealand isn't in a strong negotiating position and doesn't make the rules here. The Government is faced with a choice between high-minded, self-righteous fair play, and watching other less conscientious countries getting the business, jobs, skills, tax revenue, worldwide publicity, on the one hand - and getting the business by playing the game that everybody else is playing on the other.
Are you prepared to put your own livelihood on the line for the point of principle, or just other people's?
And do you always think the Treasury is right?
"Can I have a 25% subsidy for running my business in NZ? "
Speaking as someone who is forced to pay two levies too support other peoples' businesses (Dairy NZ levy, ACC levy); I would say it depends what you're bringing to the table.
Opportunities to apply the skills and contacts for dozens, hundreds, thousands of people that provides ongoing promotion for NZers and doesn't directly compete with existing NZ business. Could be a good deal, so what type of industry and projects did you have in mind?
John Key will do anything to keep the Hollywood establishment happy - including "blue-ing up".
[with apology for crap photoshop skills - can someone do this properly?!]
I would not have to pay twice, to see a crappy blue rated film, I have no intention of ever seeing.
And add the interest on top, for ever and ever amen.
I would not have to endure the fawning and glad handing of crony capitalism, to the detriment of producing our own movies, our own series, and profiting from them, not providing endless kick-backs to produce an endless series for millionaires to benefit from our taxpayers largesse, over and over again.
We have the scenery, we have the talent, we have the skills, we just need to put it to good use.
Strangely enough, I am personally helping in financing a movie, along with a lot of others.
A story, well written, well told, well done, no kickbacks, local talent, locally donating everything, including time.
It too will promote beautiful New Zealand, for the price of a lunch for these glorified cowboys.
For the price we are being saddled with by government, , we could turn out series of our own, for the 125 million, plus interest, plus taxes, plus GST, plus, plus, plus keep on producing, not go fawning to others.
In-house is better.
And it certainly will not cost 500 million to produce, to distribute, nor ever probably make a profit.
If it does, we will make another, ad infinitum. That is the aim.
No profits going overseas, coming here to a cinema near you, later in 2014.
Some of us are not so well endowed as a government minister, prime or not screwing the taxpayer, yet again.
We will start small and build our own way up, with after tax dollars.
Ours.
Donated freely, not surgically removed.
Though I do like to boast to the missus, I am not a big-noter....like some.
Endowment is my policy, but freely given.
125 mill of taxpayers cash to keep 100 or so crew and hire gear busy for a couple of months. Hmmm, one hopes they don't load up the production costs to get a higher rebate than they should. would they ? 500 mil for 3 movies sounds a lot. Green screen, cgi , all in studio no locations or weather holdup costs.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.