John Drinnan: Film benefits drift off plot

Big-budget movie grants scheme appears not to have delivered the promised gains for New Zealand Inc

Photo opportunities presented by big movies like The Hobbit series have kept Labour and National leaders smiling.
Photo opportunities presented by big movies like The Hobbit series have kept Labour and National leaders smiling.

Politicians have sung the praises of Hollywood film productions and their importance to New Zealand's economic future. But a public service report has revealed that a scheme central to enticing movie-makers - the Large Budget Screen Production Grant (LBSPG) - might actually have had a negative result.

Both Labour and National have smiled at the photo opportunities offered by Sir Peter Jackson and other Hollywood ventures. However, the long-delayed report from the Ministry of Business, Innovation and Employment and the Ministry for Culture and Heritage makes more sensible reading.

Of particular interest is an evaluation of the LBSPG scheme, a taxpayer handout central to New Zealand attempts to attract Hollywood studios.

The evaluation covers the period from its inception in 2004 to 2011.

The grant is the main incentive used by Peter Jackson, Weta Digital and Hollywood studios which have made 35 movies with total expenditure of $1.93 billion.

From 2004 to 2011 the scheme cost $268 million and delivered $282 million in direct benefits, a modest net benefit of $13.6 million.

That's the mid-point of a range of estimates for the net benefit - from $56.3 million to as low as negative $29 million.

However, a Cabinet paper on the scheme notes that Treasury has doubts about some of the assumptions used in the analysis, and considers it unlikely that there were any net benefits.

Yet despite the lack of direct returns, MBIE recommends tweaking the rules, reducing the cut-off point at which smaller overseas television productions can get access to taxpayer cash.

The ministry found that unless there are changes, "the LBSPG may in future not be likely to realise net economic benefit and extra money in return for investment of public moneys".

Following the review, a statement on changes to the LBSPG scheme was issued this week. Among them:

• The qualifying expenditure threshold for the Post Production, Digital and Visual Effects Grant will be lowered from $3 million to $1 million.

• The period for completing principal photography and/or key animation on bundled productions will be extended from 24 to 36 months.

• A lower qualifying production expenditure threshold of $4 million for television productions. Details of the criteria for this incentive are scheduled to be published by October 1, 2013.

These tweaks are relatively modest, and will make the handouts more accessible for TV producers.

Hooray for Hollywood

Inevitably, the response from politicians will be that many of the benefits from taxpayer handouts are intangible - such as an increased profile for New Zealand overseas, improving our image and attracting more tourists who spend money here.

As one player in the domestic screen industry pointed out, these intangible benefits are inevitably vaguely defined and over-estimated - as they were for the Rugby World Cup.

On the other hand there is an impact from big Hollywood productions taking place here - the so-called feelgood factor.

Maybe it should be sold that way - as a useful party trick, rather than as economic salvation.

Political sources say that MBIE minister Steven Joyce and some officials remain sceptical about the economic pay-off from screen industry incentives.

But the scheme is as beloved by John Key as it was by Helen Clark.

Key frequently links it to his Tourism portfolio, as he did with SkyCity and the convention centre deal.

One argument is that you should allocate money more on benefits you can count, rather than those you can only guess at.

Worrying trend

Good things come in strange parcels, but the media should be grateful for the debacle over the collection of information on the phone calls and movements of Fairfax reporter Andrea Vance. It has confirmed the view that governments will hit the media when sloppy process is uncovered.

The head of Parliamentary Service has resigned over the issue, adding credence to the view that the unwarranted intrusion was more cock-up than conspiracy. But a series of events this parliamentary term has revealed how low this Government rates the media and the public's right to know what legislators are up to.

To me, it seemed the Parliamentary Press Galley - journalists who work in Parliament - were blase about the initial infringement into Vance's privacy, when it was acknowledged that a government-assigned investigator had followed her movements around Parliament Buildings using swipe cards. The collection of phone records takes things to another level, inviting comparison with the organised breach of phone calls by the US spy agency the NSA.

Right-wing bloggers appear to have taken a tribal approach and found no issues with the Government's generally relaxed approach to surveillance.

In the big scheme of things - for an outsider, anyway - the collection of material such as journalists' phone records may seem a small breach.

But after a litany of attacks on the media - going back to using the Solicitor-General to deal with John Key's teapot tapes complaint - it fits the impression National is inclined to breach normal standards of respect for the news gatherers. And given the nature of the GCSB bill, there must be questions about how future governments will treat media communications.

Beyond caring

Given that Key enjoyed - and sometimes still enjoys - friendly relations with the media, you wonder how things got so bad between the PM's office and the Press Gallery.

Parliamentary sources told me this National Government had never had a healthy respect for the role of the media, partly because Key was a relative newcomer to politics. Key implicitly trusted his former chief press secretary, Kevin Taylor, but he had a poor rapport with working journalists. According to a well-placed source, Key maintained good relations with people he liked, but the Beehive's ninth floor developed an aloof arrogance towards the media.

"Key is about outcomes and not too worried about how he gets there," said a source familiar with National's approach to media. "The polls show that despite everything that is happening, Key is doing incredibly well." In that environment, said the source, he may believe he does not need to keep the media onside.

Radio waves

Carl Fletcher and Vaughan Smith's departure from MediaWorks' The Edge has been a major win for The Radio Network, but it is still not clear where they will end up. Their Edge show is at No 1 in the drivetime position nationwide, and there has been talk of them moving to ZM/FM, with the incumbents moving to Classic Hits. But there is speculation about whether TRN will use them to boost Hauraki, with Martin Devlin moving to Radio Sport and Tony Veitch to weekends.

TRN chief executive Jane Hastings said details for their new show had not yet been finalised, but the duo would work on one of the station's recently refreshed brands. Dean Buchanan has taken over as content director at TRN after working with DMG radio in Australia.

Sceptics have noted that MediaWorks is currently in receivership and that its TV arm has been battling to renegotiate programming contracts with the former company that are now null and void. Some have questioned whether contracts with key radio DJs may also be in abeyance during this period. MediaWorks said that was not the case but declined to be specific on the state of contractual relationships with its presenters.

- NZ Herald

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John Drinnan has been a business journalist for twenty years, he has been editor of the specialist film and television title "Screen Finance" in London, focussing on the European TV and film industry. He has been writing about media in New Zealand since the deregulation of the television industry in the late 1980s.

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