NZ screen sector on knife-edge awaiting Government review

The industry is anxiously awaiting a sign from the Government that it will counter Australia’s aggressive courting of the big studios and New Zealand talent, writes

The screen industry has been a New Zealand success story, with blockbusters such as The Lord of The Rings and Avatar putting us on the international stage.

But the sector is now on a knife-edge, with some studios sitting empty, and forward bookings drying up while the sector awaits the outcome of Government review. Government insiders have indicated the review will go to Cabinet soon and an announcement next month is expected to be a boost for the sector.

Ongoing uncertainty since the review was announced last year has seen some of the big international studios dropping New Zealand for countries offering bigger tax rebates, including Australia – which is also aggressively courting our talent and creative industries after making a big play for the screen industry in its last budget.

Other factors stifling forward bookings have been the American writers’ strike and the international economy. The timing of Australia’s move could not have been worse, however, with industry insiders suggesting there are more than a dozen productions currently scouting New Zealand, and likely Australia as well.

New Zealand currently offers a tax rebate starting from 20%, plus potentially a further 5% for qualifying productions. That compares with Australia’s 30%, with state incentives offering a further 10%, leaving New Zealand in the shade.

It’s not just the size of the Australian rebate that is causing angst here – its new rebates will come into effect from July 1, which is an extra incentive for the big movie studios, because it has provided certainty for their budgets.

The Australian play has caused so much alarm there has been a flurry of emails and submissions to Cabinet. At stake are an estimated 23000 industry jobs, a further 7000 supporting jobs, and $2 billion in privately invested infrastructure, from an industry currently contributing about $3.5b to GDP.

WellingtonNZ chief executive officer John Allen said the situation was getting serious. He was aware of some studios taking their business elsewhere already.

‘‘New Zealand has undoubtedly lost projects to other countries, which have more aggressive or supportive rebates systems.

‘‘We’ve been buffered to some extent by the quality of the crew and capability and technology that we have here . . . but I think if

you were to talk to the studios around the place, you would see lots are empty or with minimal bookings for future production. So it really is beginning to bite and of course, it impacts not just . . . actors — it has a ripple impact right across the community.

‘‘In the Wellington context that’s things from cafes, to caterers, to builders to actually you know, making sets and even the New Zealand Symphony Orchestra.

‘‘That’s obviously at risk ... so it’s important and it matters and it’s critical that the government understands the changes that the Australian government has made, and that we have a competitive foundation on which to build our industry. We’ve got a fantastic base here, a fantastic reputation, huge capability. But we do have to get this piece of the jigsaw right.’’

Competitors like Australia weren’t just courting the studios, they were courting New Zealand

talent as well. ‘‘They’re actively saying to businesses – ‘look if you move over and work in one of our states or jurisdictions, here is the sort of support we’re able to provide you’.’’

Brendon Durey, president of the New Zealand Screen Industry Guild, said the canary in the mine was the studios. He understood that after productions like Minecraft stopped shooting in November there were few forward bookings across the rest of New Zealand.

‘‘Now a certain amount of that might have to do with the uncertainty created by [the government review] and, you know, offshore streaming services, not knowing what to put in their Excel sheet when they’re analysing countries.

‘‘But also I think also a whole lot of it is just the new post-Covid, high interest rate climate. Money’s not so cheap. So the streaming services have dumped a whole lot of their forward con

tent . . . you’re starting to see UK and Canada having some spare studio capacity as well.’’

But New Zealand was also not very competitive at the moment because of the race by our international rivals to attract the big studios with more aggressive incentives.

‘‘I think you’ll see a lot of countries are recognising the fact that it’s a bit unique, the film industry, the way it just dumps money into economies and doesn’t really take anything away, apart from photographs.’’

There was a lot of misunderstanding about ‘‘corporate welfare’’ but the way the rebate worked was that studios needed to spend a lot of money in New Zealand to get anything back: ‘‘So there is what I think is a really twisted view of the incentive, calling it a subsidy and you know, things like ‘why should we give $160 million to James Cameron, from hard-earned taxpayer money?’

‘‘Well, he dumped $800m in the country.’’