Is NZ’s film fantasy fading?

Movie-making is worth $3.5b annually and blockbusters like the new Avatar help prove our world-leading skills and crews. But a Government review of the Screen Production Grant has stalled momentum, leading to productions choosing to film overseas - and even ask for Kiwi experts to jump the Ditch and work in Australia.

After a near six-year journey, interrupted by Covid, lockdowns and closed borders, one of the most ambitious movies ever filmed in NZ, James Cameron’s Avatar: The Way of Water, is set to be released. But as the hype grows, with expectations it will join the select group of movies grossing $2b-plus, the industry here is worried for the future.

‘‘In a country of five million, I feel like we had five million of you working on the film,’’ says Avatar producer Jon Landau. It’s been a long journey for Landau, as it has for most of the Avatar crew.

Speaking in Wellington as postproduction on the film finally wrapped, Landau had earlier posted a picture on social media of cast and crew celebrations. Director James Cameron is holding up a giant bottle of champagne, the others are all smiles and fist pumps.

Among them are some of the 1200-plus New Zealanders who worked on the movie over the past five years.

Cameron’s decision to shoot his Avatar sequels in New Zealand was a huge boost to this country’s screen sector, already firmly on the map thanks to Sir Peter Jackson and his groundbreaking digital effects. There are up to three more Avatar sequels in the pipeline.

Worth an estimated $3.5 billion to New Zealand annually, the film sector has become critical not just in terms of GDP, but in attracting and retaining creative talent in New Zealand.

But a Government review of the Screen Production Grant – which paid around $140 million to Avatar – has stalled momentum.

Industry insiders admit the prolonged uncertainty about which way the Government might jump has seen New Zealand lose projects overseas, including to Australia, as countries compete aggressively for movie money with bigger rebates and financial incentives.

We¯ta¯ FX chief executive Michael McNeil says New Zealand’s big advantage over other countries is its people: ‘‘We have some of the very, very best people in the world (and) so far we’ve been able to persuade studios to come to We¯ta¯ FX despite the rebate disadvantage. It’s been all about the skills and talent of the people here.’’

But with Australia offering better rebates, a welcoming approach from its government, very experienced crews and good facilities, it was getting tougher. Canada was similarly proving more competitive.

‘‘We¯ta¯ has to compete for every project, and the competition from other countries, particularly those who offer higher rebates, makes for a challenging business outlook, McNeil says.

‘‘The work goes where studios can find the right mix of quality and cost, and the tax rebates are a big part of that. Studios are increasingly looking at other jurisdictions, so it is possible that most of the future growth will be overseas.

‘‘Vancouver, for example, continues to do well attracting studio interest, and Melbourne is getting lots of attention as well. The studios, as our clients, drive the work, so it really comes down to the way they see the landscape, looking at both the financials, mostly rebates, and the ‘soft’ factors, such as the ease of dealing with the government film officials. How big is the ‘welcome mat’?

‘‘For several recent larger films, the studios have come to Wētā FX saying they want to work with us but they also want the benefit of more favourable tax rebates elsewhere.’’

In one case, US producers drawn by the higher rebate elected to shoot in Australia, and they asked Wētā FX to work with them there, McNeil says.

‘‘In another, the producer directly said that to be able to work with Wētā FX we would need to agree to do the work primarily in Australia.’’

McNeil says blockbuster movies will be a big part of the entertainment mix for the foreseeable future. But the question mark is over whether they will continue to be made in New Zealand.

‘‘We know that people get excited about them in ways that few other kinds of entertainment can match. So we’re confident there will be lots of work in that space. The risks for us are mostly about where that work will happen and how much of it we can attract to New Zealand.’’

Philippa Mossman from the New Zealand Film Commission says Australia is a bigger market and has a much bigger screen industry and bigger budgets.

‘‘However, in direct competition we

likely win as many live-action productions from Australia as we may lose. Our compact size and cohesion at times plays in our favour.’’

And Australia was not our only competition – countries such as the UK, Canada, South Africa were all fierce contenders.

But she said New Zealand still had work in the pipeline, including Time Bandits, Sweet Tooth and the second series of the hit Taika Waititi series Our Flag Means Death.

A big Apple+ production would also be announced soon.

John Allen, chief executive of WellingtonNZ, says it’s unthinkable that New Zealand wouldn’t move to match its overseas competitors.

‘‘Avatar is fantastic and will continue to place both New Zealand and Wellington firmly at the cutting edge of film-making on the world stage. So the level of interest in the capabilities of this place including this city and region is very, very high.

‘‘But . . . for major projects to be economic they need to be able to access rebates which are available in international markets around the world. It’s a highly competitive space and unless New Zealand has the foundation rebate structures in place to enable us to compete, we won’t get that work.’’

The rebate offered in New Zealand – 20% on qualifying costs with the opportunity to get a further 5% in some circumstances – was no longer competitive.

‘‘In Australia, people are getting 30% from the federal government with the opportunity to get up to another 10% from the state governments.’’

The Government was reviewing the structure – and that was creating added uncertainty. The review was launched last December, and ministers are not expected to make decisions till mid-2023.

Studios were opting for greater certainty in Australia or Canada, Allen said.

The Screen Production Grant has been a political hot potato because of the sums involved.

But Allen said that in order to qualify for a rebate, the studios had to spend hundreds of millions of dollars more in the local economy. New Zealand needed to decide if it wanted a screen industry.

‘‘In this city we’ve just got the most fantastic talent and depth of talent and people want to come here and make their films because of that talent and creativity and the welcome they get.

‘‘We¯ta¯ FX has 2000 skilled, highly skilled people working in this sector in Wellington. So much of the spillover impact on the growth of the technology sector in Wellington, which has been astonishing, is due to the work that Sir Peter Jackson and the We¯ta¯ team have done over many years.’’

But that workforce was also highly mobile, and losing those people to Australia would leave a huge hole in the economy, and in particular Wellington.

‘‘The proposition is really simple. We’ve got huge capability and opportunity; we’d be nuts to give it away.’’