Bernard Hickey agrees with Treasury's objections to the increased rebates to win the Avatar movies. They're unfair, uneconomic, fiscally imprudent and rushed

Bernard Hickey agrees with Treasury's objections to the increased rebates to win the Avatar movies. They're unfair, uneconomic, fiscally imprudent and rushed
This small building in Miramar is the only tourist venue for Middle Earth tourists in Wellington. The Weta Cave can take 20 visitors at a time.

By Bernard Hickey

This view is not going to make me popular among the very lovely luvvies of the film industries of Auckland and Wellington. It's also probably arguing against my own personal financial interest because I'm now a home owner in Wellington.

The Government announced on Tuesday it would increase its Large Budget Screen Production Grant (LBSPG) or rebate to as much as 25% from 15-20% now to win the next three Avatar movies, which would then pump up to NZ$500 million into the local Wellington economy. Wellington Mayor Celia Wade Brown was thrilled. The film industry was over the moon. Even the Labour Party supported the move, albeit begrudgingly.

However, any thoughts of celebration I might have had were promptly snuffed out when I read this Cabinet paper on the decision, and in particular, the Treasury's view on changes to the LBSPG and its associated scheme for local productions known as the Screen Production Incentive Fund (SPIF). The Government announced the combination of the schemes, removed the cap on the SPIF and increase the rebates to a common maximum of 25%.

Read the whole thing to get an insight into how this Government thinks and makes decisions, but the best bits are on pages 14 and 15.

Treasury said in the paper prepared by the Offices of the Economic Development Minister Steven Joyce and Arts, Culture and Heritage Minister Chris Finlayson ahead of the December 2 cabinet decision it did not support the changes to the two schemes, and also wanted the subsidies dropped altogether.

Treasury estimated the current LBSPG scheme had delivered net economic benefits of just NZ$13.6 million over its first seven years from 2004 to 2011 at an annual rate of return of less than 1%.

The cabinet papers show the Government spent NZ$472.48 million through the Large Screen Production Grant (LBSPG) from 2004 to September 2013 to encourage spending of NZ$3.308 billion or an average of NZ$52.49 million per year. That sounds great, until you look at the net benefits for the economy and the Government in particular.

"The current regime is also estimated to have had an overall negative fiscal impact of NZ$168 million once tax revenue that would have been earned anyway is taken into account," Treasury was quoted as saying in the cabinet paper released with the decision.

So just to summarise and restate in the plainest language. The Government spent nearly half a billion dollars in seven years and got back NZ$13.6 million in net economic benefits. Not only that, but the extra spending actually reduced the Government's fiscal position by NZ$168 million. Steven Joyce is a savvy businessman as well as the Government's Mr Fixit. I can't imagine him signing off on a business decision with a net return of 1% per annum.

So the current scheme, before it was ramped up yet again, didn't make economic or budget sense, yet a Government that is supposedly pursuing a strategy of fiscal restraint and economic rigour pushed ahead with the deal, and against the advice of its economic advisers.

Nebulous wider benefits

Joyce argued there were wider benefits for Tourism and for New Zealand's profile from the new beefed-up scheme and the deal with 20th Century Fox and James Cameron, which specifies one red carpet premiere in New Zealand and a featurette on the DVDs extolling New Zealand's virtues as a place to make high-tech movies.

The trouble is Treasury has looked at the studies of the last smaller scheme and found few wider benefits.

"The two evaluations of the current subsidy scheme show at best small economic benefits, with limited evidence of spillover benefits within the film industry, Tourism and New Zealand in general," Treasury said.

"Further subsidies will only increase costs and offer weak benefits," it added.

Where's the Hobbit theme park?

A quick look at the report on the Tourism sector released by Steven Joyce's own office last month showed real tourism earnings had been falling since 2004 and average spend per person had actually fallen 30% in the decade to 2013. New Zealand talks a good game on becoming the Middle Earth of the Tourism world, but it has done little to actually lift the Tourist sector and offset the hammering it has taken, along with other export sectors, from the over-valued New Zealand dollar.

For example, despite nearly half a billion dollars of Government spending on the six Hobbit-themed movies and tens of billions of dollars worth of 'free' promotional value in global cinemas, Wellington still does not have a Lord of the Rings visitor centre or theme park, despite years of chatter. There is a two roomed 'Weta Cave' display in Miramar which is well worth a visit, but is literally no larger than an average house (pictured above). The Weta Cave offers free tours for a maximum of 20 people at a time once every half an hour. It is staffed by Weta Digital workers on their off days. The fine Sunday afternoon I visited last year with my family there were eight people on the tour, and half of them I was related to.

'Race to the bottom'

Both Treasury and the Offices of the two ministers warned that increasing the subsidies meant New Zealand risked joining a "race to the bottom," battle of the subsidies between countries being gamed by the big studios.

"Permanently matching overseas subsidies to generate activity in New Zealand is not a sound basis for economic development policy and favours the film industry over other sectors," Treasury advised the Economic Development Minister.

Exactly. All those redundant fish filleters in Christchurch and timber millers in Rotorua who appealed in vain for help to deal with the same over-valued New Zealand dollar and foreign subsidies as the film industry must be wondering what they did wrong. Why did their lobbying fail, but the lobbying of James Cameron and Sir Peter Jackson did not?

Ready, fire, aim

The cabinet minute also paid lip service to the idea that the new scheme would somehow be temporary and scaled back once conditions allowed. Bizarrely, the decision was taken by the cabinet to make these major changes to the schemes without having done the fiscal analysis on how big the subsidies might actually be and how they fit into the rest of the Budget process. 

"Officials will assess the impact on the market of the changes and within one year of their introduction will report back on the options for the appropriation," the cabinet paper read.

Treasury again asked why there was such a rush to combine the two schemes and increase the scale of the subsidies, especially given they were tweaked and boosted less than nine months ago. It recommended doing a proper analysis and making the decision in time for the May Budget. Any deal that had to be done to win the Avatar movies could be done separately and quarantined.

"Given the proposals are likely to involve a fiscal impact, they should be considered as part of Budget 2014 where they can be assessed against other potentially higher priority and higher value initiatives," Treasury said, adding the cabinet paper did not look at the fiscal implications, which should be done before any decision was made. The cabinet went ahead anyway.

Treasury pleaded for the Government to not to 'ready, fire, aim.'

"If Ministers consider decisions are needed quickly to retain the Avatar production in New Zealand, Cabinet could consider a one-off increase in support for that production only," Treasury advised.

Show us the equity

The one aspect of the new scheme that seemed to make sense was the decision to turn the rebate for local productions worth NZ$15 million to NZ$50 million into an equity stake, rather than just a grant. That meant in the unlikely event the movie or TV series made a profit the balance sheet of taxpayers might actually benefit. It also begged the question: why didn't the Government demand an equity stake in the Avatar movies? If only the Government had one with the Hobbit movies and Avatar the deals might actually have made a profit.

The end result is a government decision made against the advice of its main economic ministry and that is unlikely to benefit the economy or the budget. It unfairly subsidises one export industry over many others and was made in un-necessary haste.

This doesn't look like a coherent economic strategy. It looks like another deal cooked up over dinner and handed to the officials to rubber stamp. 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

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Bernard, I think you might have missed out a critical against in the following sentence:
It's also probably arguing [against] my own personal financial interest because I'm now a home owner in Wellington.
 
You must have the same make of keyboard as me, mine misses out words all the time.

So do I Roger, but I haven't yet been able to reach Bernard. I'll add it in and if we're wrong, he can remove it. Cheers.

The Treasury clearly has a counterfactual which assumes that at least some large budget movies would have been made here without the tax breaks. But it is debatable just how many "some" would have been.
Large budget movies have been made here largely because of Sir Peter and Sir Richard, but would they have stayed here without a supportive tax regime? Or would they have taken off to another country where there was a supportive tax regime?
I suspect the latter.
And just because the tourism sector has not recovered its previous strength, it does not follow that LOTR/Hobbit has failed to attract tourists.  Again, it depends on what your counterfactual is.  Might the tourism numbers have been even worse without LOTR/Hobbit? Probably.
It all sounds a bit like a Treasury beat up to me.
   

Bernard, you should read this:
 
http://gordoncampbell.scoop.co.nz/2013/12/18/gordon-campbell-on-the-new-...
 
Then you should have a chat to some film workers in Auckland and Wellington.
 
I am a big fan of your writing, but this opinion piece is way off the mark from the realities of the New Zealand Film Industry and it's economic impact.
 
Plenty of unemployed film workers around currently to talk to....

Show me the money - LOTR box office sales certainly confirm a business operation not in need of taxpayer transfer payments. And I cannot fathon why it is my responsibility to buy jobs for my fellow NZers, if that is what they are.

And you're buying jobs/employment for which the definition differs from that of our national employment law - thanks to Hollywood's earlier instructions which the government duly implemented under the 'Hobbit Law'. 

Agree strongly that it's very undesirable for countries to get into a subsidy race in this or any other area.  But New Zealand didn't start it, and it's not New Zealand's fault that other countries are tipping the playing field away from us.  If we do nothing, a playing field on which we'd have a good chance of winning if it were level, will remain tipped away from us.  Other countries will win, thanks to their subsidies rather than their merits, and we will lose out despite our real merits as a place to make top end films in.   How is that a better outcome?

Lord of the Rings tourism is still very big business in Queenstown. My international clients often ask to be taken to filming locations from the movies.
 
also, again, it's a rebate on money spent. Not a subsidy. 

Lord of the Rings tourism is still very big business in Queenstown. My international clients often ask to be taken to filming locations from the movies.
 
also, again, it's a rebate on money spent. Not a subsidy. 

Personally , I have no problem with these subsidies such as the Tiwai Smelter, the Americas Cup  and this one.
Each is different , but each makes some sense for differing reasons
On a pure numbers / yield basis it is a poor investment , but what do we spend on NZ on Air  each year? No one really complains about NZ on Air  too much
While it seems the recession is nearly over for us and 2014 looks promising , we are still in a global recession where competition is fierce , so we may have lost the movie due to competition .
Movie-making is a high value intangible export, it could be a good long term industry if we get it right .

I also agree that John Key always make s the right choices when it comes to corporate bailouts. While to some people he appears to be making it all up as he goes with no real idea of what he is doing , just running from one deal to the next with common sense thrown of the bus at the first intersection. In my mind I can see a subtile plan that most people clearly cannot comprehend because they do not have the business skills that John Key has, skills that enable him to see the best course forward  and to only hand out free money to those corporations who really deserve it. Picking which films to back isn't so hard when you have the business skills that John Key clearly has.

"Read the whole thing to get an insight into how this Government thinks and makes decisions, but the best bits are on pages 14 and 15"
Under the heading recommendations Page 15 says

100 It is recommended that cabinet:

1 Agree that New Zealand should work to achieve a screen sector that is financially stable and internationally competitive.

2 NOTE, that, for the time being some amendment to screen production incentives is required to attract international film and television to New Zealand
 
Also this report was based on older information and has been updated with the release of the PWC The Competitive Environment for NZ Film and Television report and the NZEIR NZ Screen Production Future report.
You also refer to MR Joyce's report on the tourism sector. On page 41 you will see the contribution that Media & Telecommunications adds to the GDP and how significantly higher it is than most other industrys including Agriculture and Forrestry.
And if you refer to the Oxford report The Economic Impact of the UK Film Industry you will see why other countries are so keen to get their hands on Hollywoods money.
What Treausury is failing to disclose is the multiplier effect on the Film Dollar and how that benefits the industry.
Not to mention this is an industry where workers have been stripped of almost all the other labour protection laws taken for granted by other industries.
 

 Two important things I think to consider when comparing subsidies  to the film industry to other industries ( say fishing or timber )

 

 ** Firstly the film industry create a lot of high wadge jobs and creating more of these is where I believe NZ should be focusing.

 

 ** Secondly we must acknowledge the high exposure nature of the film industry.  These films do become a massive advert for the country and I don't mean just tourism.  For New Zealand technology in general.  It says to the world we aren't just a nation good at farming, we are also a nation with technical and artistic expertise good enough to create world class films.

How can you suggest that wouldn't be subsidising out of our own pockets? Sure, I've still got the same number of $ bills in my wallet, but with an extra $50bn just injected in to the economy, they're not worth quite as much as they were the day before?

Sounds good ZZ - free money, we just print it, don't even have to borrow it, life is good. But to be frank why only $50bln? I think print enough to give everyone a mansion, car of their choice, 3 big annual holidays etc.....I just can't understand why only economies near the point of collapse through years/decades of piss poor policy making are the only ones that print like you suggest. They're obviously the bright boys and we should try like hell to emulate them - are you and me missing something here?

The real problem with this story is that Bernard has believed MBIE's original review of the Large Budget Screen Production Grant that was released on July 31, 2013.  That report is the basis of Treasury's claim that the net benefit of the scheme from 2004 to 2011 was only $13,6 million.  The report is nonsense, and it has pretty much been discounted by everyone now.  I believe It was based on deliberately flawed Terms Of Reference (I share this view with many).  It has arguably miscalculated taxation revenue by as much as $60 million, understated employment, overstated projects that would have come to NZ without the incentive (so-called "deadwood"), ignored the multiplier effect and not correctly taken tourism revenues into account.  MBIE got it wrong, and they have re-examined the information.  Bernard should take a look at the PWC report recently released.  Maybe then he can get his facts straight.
How can it be wrong to bring lots of new money into New Zealand, that would not have come at all if not for rebating a relatively small portion of it?  Hundreds of millions of offshore income for a labour-intensive, nonpolluting, vibrant industry that provides many economic benefits.  If Treasury had their way, NZ would never engage in any activities that result in increases to real wealth. Of course John Key, Steven Joyce and Chris Finlayson got it right this time, and hats off to them. 
 

Fine - but as a  taxpyer I feel little responsibilty or need  to fund media work schemes which can ably stand alone without state welfare. The endeavours of Jackson and Cameron are more than capable of self financing from previous sales/profits, whereas the poor in New Zealand have little or no resources and are more deserving of welfare from my pocket.

Sorry, but I think you miss the point.  NEW offshore money comes into the economy (from US Studios, largely) that would not have come otherwise.  The Wellington posse fall into that camp - the 100's of millions from The Hobbit and Avatar would not have come into NZ without the incentive.  Warner Bros/Fox would have gone elsewhere. The Auckland industry, which represents 70% of the film sector, has been dead with the low 15% incentive - no new money coming in.  The new money trickles down as it is re-spent and benefits everyone.  You as a taxpayer do not fund this - the NEW money must be spent first.  The country gets a new loaf of bread, gives back two slices, but keeps the rest.  But we wouldn't have gotten any bread otherwise. So no extra funding, only gain.

The new money trickles down as it is re-spent and benefits everyone.
 
Proof please or it doesn't exist - paying talented foreigners to repatriate their earnings has to be excluded from the equation.
 
At the same time refute this Treasury claim, again with proof.
 
The Government spent nearly half a billion dollars in seven years and got back NZ$13.6 million in net economic benefits. Not only that, but the extra spending actually reduced the Government's fiscal position by NZ$168 million. Steven Joyce is a savvy businessman as well as the Government's Mr Fixit. I can't imagine him signing off on a business decision with a net return of 1% per annum.

Yep, it's called the "multiplier effect", I suggest you research that yourself.  As for the $13.6, I have already described the flaws in the report.  You can read the Grant Review report from the MBIE web site, search for Screen Sector Review.  And while you're at it, get your hands on the recent PriceWaterhouseCoopers report that refutes the previous study.  Also check out the Oxford paper on the UK Screen industry that directly contradicts MBIE's paper.  And finally, check out the many articles online regarding the screen industry incentives in Canada, Eastern Europe, Louisiana, New York, South Africa, the UK, Ireland, Australia, and even the recent stuff out of California.   

Watch this if you want to understand the trickle down effect. 
Take note of what the caterer has to say about the trickle down.
https://vimeo.com/79916042

"  The new money trickles down as it is re-spent and benefits everyone."

"Tricke Down" is a myth.  Large businesses and wealthy people get that way by having revenue streams that catch a small potion off the transaction and funnel that value back upstream.  Even when they spend, they prefer to spend within the inner circle, and inner courts.  Why would they spend outside - the service value of those peoples' personal needs also tends to lie within the core businesses, as that's what they know, that's who they work with, and that's where they invest.  Gravity traps light into a black hole, same as "trickle down" money, very little escapes.

The movie industry, as is manufacturing in general, the opposite of this.  A large web of support service is required from a huge variety of sources - and few "pure" ones (as a movie project tends to be short term, and by necessity of the movie industry few big projects continue past their finish date; eg airing+3years).

Movie Industry is a brilliant one to support.
It's like tourism that it attracts foreign trade and skill and contacts.  
It's sustainable, it's perishable, it's a complete fashion whore (seasonal fads).
It doesn't primarily rely on a singular skill or resource (iron, coal, farm land).
It doesn't have to have a singular dominant player (Bollywood, MGM, Fox vs Fonterras).
It constantly changes, thus doesn't need artifical changes to keep revenues moving.
It doesn't tap raw (Exhaustable) resources - no worry about "Hobbit spill on the beaches" or "Fracking Avatar contaminating groundwater for 500 yrs"

It does require oil to move the set around, but that isn't pinned to the success of the movie, as humanity faces that particular problem, the answer as it is contextual to the movies will sort itself out.

2 Weeks ago Bernard said he didn't actually understand how the LBSPG worked. He said he would have to investigate it more
http://www.radiolive.co.nz/AUDIO-Latest-business-news-with-Bernard-Hicke...
I wish he had investigated it, before writing this uninformed opinion piece.

You are such a Grinch, Bernard.

Much of the film support industry is in the crapper. Its a boom bust industry. The long run of Zena, Hercules, LOTR, King Kong, Last Samurai, Power Rangers, Spartacus (probably a few others in there) is finished. Avatar is a digital project, with digital creativity, and some motion capture work. This needs significantly less support activities than the others projects listed above.
Unskilled/low tech work movies in NZ is heading the same direction as manufacturing. We simply can’t compete against no health and safety, tax breaks, high wages (mainly due to house inflation) etc. etc. No surprises here. 
Hopefully this deal helps develop a bunch of workers/tax payers that work higher up the food chain in digital arena, and where NZs location is less of an issue because they can replicate their work into the post production teams in the US.

I agree with you in part - digital is certainly a significant part of the future an needs to be developed.  But for the present and forseeable future, practical filming has a very large role and New Zealand should capitalize on it.   

My son and I went to what was basically a private screening of "Ender's Game".
2 of us in the entire theatre.

The move to expensive movie production techniques is going to start to have it's toll.

There is not one industry in this country that does not reap the benefits of the film industry.
Our superior boat building expertise is built around software developed for the fim industry.
Tourism - 10% direct increase in American Tourist since the release of the Hobbit movie.
Rental Cars
Timber industury
Hospitality and Accomodation
Agricultue & Forrestry - Yes people see our beautiful scenery and use it to justify our produce must be just as good
Clothing & Textiles
Kiwi Music - Music videos are virtually made for free in NZ if it wasn't for the generosity of crew and suppliers making these vital pieces of advertising for our muscians, they would not be generating overseas success (Standard Budget used to produce a Music Video $10k True cost $45K thats $35k per music video that is subsidized to the music industry)
You name it it will be recieving some benefit from the Screen Industry.

Dairy doesn't - remember we don't have "beautiful scenery" only cows pooing in the rivers.

..anywhere there are much more pretty countries in the world, many without the third world poverty effect of "mexicans with cellphones" who are enprisoned here

Dairy relies on the TVC sector to sell its products overseas and with in New Zealand. People are to focused on the 'Avatar ' Quotient and forget this is actually only part of a much larger jigsaw.
Take a look at Fonterra's world wide advertising budget. It needs the screen Industry to compete.

I disagree.  They've (Fonterra, primary marketing for Dairy sector)  been plugging that line for a long time, and I have yet to see it pay off anywhere as well as they claim.
What I have seen is them making dumb claims, then having to rush back to NZ and tell everyone they have to make expensive changes "because the customer demands it".  When the customer did nothing of the sort, and certainly has no intention of paying for said "demand"

There is not one industry in this country that does not reap the benefits of the film industry.
 
So what? - I do not have an association with any business - I am one of many in this category - it is the task and duty of the promoters of these enterprises to fund their own costs to justify sole claim to the profits.

So what you are saying is you have no job and don't collect a benefit. 
Therefore you musn't pay any tax so this does not effect you.
Why are you commenting then?

I am a self funded retiree commanding a sum of unencumbered capital that certainly owes tax from the income it generates and from the capital gains it accrues when I am in the mood to exercise it more vigourously.

So you do have an association to business, because thats how you made your capital purchases. I can also garuntee you would be highly against the tresury suggestion of a capital gains tax.
So as I said before you have benefited from the screen industry wether you think so or not. 
Just remember that as you enjoy your retirement watching TV/Movies using the internet, with out a screen industry you would not be relaxing, with out money coing into this economy for overseas you certainly wouldn't have a capital portfolio and the longer the government is able to keep thousands of others gainfully employed especially in an industry that contributes well above its size in GDP that they will be able to hold of on introducing a capital gains tax in the near future.

So you do have an association to business, because thats how you made your capital purchases.
 
See my comment below.  But most do not associate usury with productive business.

So as I said before you have benefited from the screen industry wether you think so or not.
 
And I am more than pleased to pay for the entertaiment I choose to watch.

No thanks. I enjoy the services that my taxes help to pay for.

You reckon Mr ZZ. You don't know jack. Mind you, life could be worse, i could be spending my days being harrased by tennets that thier stove doesn't work!  Haha

You don't think NZ having (non-dairy) tradables across the borders is a worthwhile investment in GDP?

Business is free to engage in any endeavour by any means in my view, so long as it does not demand I owe it a living. I ask for no favours or kick backs when I engage the bond markets or lend reasonably significant sums to the government - in fact I get taxed for accrued capital gains at my marginal tax rate on top of income tax.

And every company and bond that you invest in relies on advertising to increase the value of their stock.
Like I said your making a living of the screen industry wether you believe it or not

I dont invest in anything other than sovereign debt - I have yet to see an advertisement seeking my support. Nonetheless, as I say, I am willing to purchase screen industry output - but not state funded corporate welfare, when there is little need beyond egregious greed.

but only  short term?
regards

But your's doesn't sound much like a feel good news story. Whereas movies with digital blue people, and kiwi sailors getting bushwhacked by some rich American with his Aussie helmsman are......

Yep, they make movies about my industry and never offer me a cracker.

So you do support the rebate to the Avatar movie then?

Lending to government and bonds (lending to big projects and government) is for operation of a country and financing the crazy foolhard failures that are government plans.

 Which is exactly the type of endeavour this is, bringing investment and skills to NZ, creating demand for services and infrastructure, causing an upturn in demand for perishable consumables (movies & services consumed).  Those are investments in NZ, and that's why governmunt and large projects are about.

Avatar (et al) can demand rebates from governments -because- their presence has value.

all that remains is haggling over the price - and sadly I have yet to see NZ government capable (instead of culpable)  in anything significant.

As a percentage of gdp, the government manages to snaffle up around half of all money spent in NZ, via company tax, gst, paye, fuel tax, acc, sales tax, alcohol tax etc.
So securing $500=-$1000million that wouldn't otherwise be spent here is a good thing.
Likewise with the Hobbit. The media failed to pick up on the fact that the SAME week the govt did a deal to keep the Hobbit in NZ, the studio was spending a quarter of a billion dollars to buy the Harry Potter studio, in the UK, (where they already started doing scouting for alternative locations).
Every day thousands of tourists are doing LOTR tours in many parts of NZ - over a DECADE after the first movie came out.
 
Finally, your arguement that this is favouring one industry over others is nonsense. The government spends literally billions of dollars subsidising other industries, in all sorts of ways, including (but not only) spending
- $4500 million though the Ministry of Business, Inovation and Employment.
- $940 million via the Ministry of Foreign Affairs and Trade
- $623 million through the Ministry for Primary Industries
 
 

Picking winners is a task best left to those with private means. Ministers of the Crown dispensing collective taxes for third party private gains never ends well. Conflicted decisions are never the right ones.

While I agree with your sentiment and principle, sadly it is the Ministers that are the ones creating the over taxation in the first place, thus it is up to them to backtrack in order to survive.  ie their is no space left to a third party to work with due to the government decisions

  The film industry has also bought in many very talented foreigners to work on the films.  Especially via Weta Digital.   Some of these people have stayed on and have set up other high tech companies.   I work doing CGI in Wellington ( not for Weta ) and see some very special stuff going on.  Wellington is becoming a specialized tech hub.  I'm not sure how you would measure this in GDP, but this is the longest lasting of benefits.

Great type of manufacturing sector to get into too!  reusable, consumable, repeatable, low storage costs, almost no direct environment cost, density not an issue,  leads well into IT and other modern knowledge industries, very agile industry.

Also it's a premium product, not a commodity one (eg food, black mining), so customers tend to pay well for a little good product, as opposed to demanding a right to ultra cheap perfect product.

As the cliche goes: The Egyptian told his son to become a poet not a farmer, because when times are hard and the tax man comes a poet can just make up more words.

FYI here's the MED report from 2012 which included this:
 

"It is apparent that, for the period examined, measurable net economic benefits from the 

LBSPG are not high. Several factors, in part specific to the screen production sector, tend to 

diminish positive economic outcomes. These factors include deadweight costs; the high 

mobility of labour in this sector; and the intermittent opportunities for large-scale 

productions. "

 

http://www.med.govt.nz/sectors-industries/screen-industry/pdf-docs-libra...

 

And here's NZIER review of the literature, which is hardly a ringing endorsement or slam-dunk in favour of more rebates.

 

"In the current situation, the benefits of having increased activity compared with the 

likely alternative – as we understand it – seem to be likely to be higher. There is 

potential for national gain even at a higher contribution, provided the projects are 

integrated into the local scene to produce flow on expenditure, and even more if 

there are ‘spill-overs’ such as the tourism benefits associated with the Tolkien films. "

 

http://www.nzfilm.co.nz/sites/nzfc/files/NZIER%20report.pdf

 

By the way, where are the tourism benefits from Avatar? I can understand there might be some 'Middle Earth' ones, but Pandora? Our blue dots are not different to the ones generated in a studio in Ireland or Australia. Pandora is not New Zealand.

 

cheers

Bernard

This would be the same report that Mr Joyce substantiated by saying that the downturn in Auckland Film production was directly attributed too the Increased Rail Network.
A report that is so flawed that the minister has to resort to childish unsubtantiated remarks, before realising three months later that he was the joke of the Developed world with his inabiity to recognise that every other nation in the world could see the benefits of film investment.

". Pandora is not New Zealand."

Dunno, the atmosphere can be pretty toxic at times...

"Our blue dots are not different to the ones generated in a studio in Ireland or Australia. Pandora is not New Zealand"
 
Amazed that you have been allowed an early look at the scripts and the filming locations...
 

Bernard, as I have stated above, the real problem is believing this flawed report.  Please read my comments.  We have some backup on the $60million flaw.  The labour assumptions are rubbish, and the "deadweight" calculations are overstated.  At best, an ultra conservative report, at worst, deliberately manipulated to suit the predetermined outcome.  But MBIE has seen the light.

Bernard, you really need to pay attention to what the other well informed film workers here are writing (and not a totally incorrect and out of date, widly panned report).
 
While you are at it, come down and spend some time in the South Island and out of the cities to see just how big film tourism is. 
http://qz.com/153412/the-forest-where-the-hunger-games-is-filmed-saw-a-3...
If you are in the mood to listen to some smart industry players, have a read of the comments here:
http://garethsworld.com/blog/economics/film-industry-benefits-smoke-mirr...
 
Finally, I am going to quote from another film source:
 
It's quite odd that people have a problem with government actions and legislation that encourages foreign companies to pump hundreds of millions of dollars into our economy but have no issues with government actions and legislation which enables foreign companies to pump hundred of millions of dollars out of our economy.
 
 

Heck during the filming of LOTR, Sean Bean alone, "donated" $50k to the Dunedin economy overnight..../