Changes to funding for the screen industry will see larger taxpayer rebates for blockbuster movies and the Government will effectively become a shareholder in some New Zealand films and television programmes as it moves from direct grants to taking up to 40 per cent equity in an attempt to recoup some of the profits.

The Economic Development Steven Joyce and Arts Minister Chris Finlayson outlined a boost to taxpayer funded incentives for both international and local productions yesterday during the announcement that the Avatar films would be made in New Zealand.

The changes include raising the rebates for big-budget blockbuster movies from 15 to between 20 to 25 per cent. Domestic television productions will also qualify for rebates of up to 40 per cent - up from 20 per cent - and the Government will invest in local productions with budgets of between $15 million and $50 million by taking out equity in those productions as part of changes aimed at ensuring more New Zealand productions were of a standard to be commercially successful.

The equity arrangement would only be for productions which had a good chance of commercial success. Cabinet papers about the change estimated the Crown could recoup between 10-30 per cent of the money invested.


Mr Joyce had appeared to rule out more generous rebates earlier in the year and Cabinet papers show that Treasury advised against increasing subsidies for the film industry. It said that evaluations had showed there were "at best, small economic benefits" with a limited spill over effect into the wider screen industry, tourism and New Zealand. It said increasing the subsidies would only increase costs and reduce those benefits.

However, the lift in rebates was cited as one of the reasons critical in the Avatar makers opting to film in New Zealand.

Screen industry players welcomed the extra incentives for local productions, saying it would help build up the industry to make it more sustainable.

Actors Equity president Jennifer Ward-Lealand said while the union did support large-scale foreign productions coming to New Zealand, it was also important to develop the local industry and the changes to incentives allowed for that to happen. Tax advisor to the film industry Pieter Holl said the focus on building New Zealand's own intellectual property was needed. He also welcomed the increase to rebates for international productions, saying the lift should be enough "to get us back in the game."

Yesterday Mr Joyce said other countries were increasing their incentives and while New Zealand could not beat them all it had to be "realistic" and lift its rebates. "We see that as a short to medium term solution, with the longer term solution being building up intellectual property in this country."

Cabinet papers noted there had been significant concern about a downturn in international production since the Government opted to keep them at 15 per cent mid-year, and those in the industry as well as big players such as Sir Peter Jackson had called for action.

The changes will also mean the makers of major international films can get a 20 per cent rebate on their costs in New Zealand - up from the current 15 per cent which applied for movies such as the Hobbit. As well, they will qualify for an extra five per cent rebate if the production is of significant benefit to the New Zealand economy, such as through the use of New Zealand-based staff and building up the local film industry.

There are also greater incentives for lower budget productions, including up to 40 per cent rebates for films and television programmes with budgets of up to $15 million. Currently television programmes qualify for a lower 20 per cent rebate.

Arts Minister Chris Finlayson said the changes were to try to ensure New Zealand built up its own intellectual property in the sector, rather than remaining reliant on big international productions. Building up a greater body of domestic work would also ensure the industry was more sustainable, could survive in the gaps between major international projects, and ultimately make it less reliant on grants.

The new rebates and incentives will apply from April 1 next year and the NZ Film Commission and Film NZ will consult on the changes for local producers early in 2014.

Main changes:
* Big budget movies (more than $50 million): rebates of 20 per cent for spending in New Zealand. Rises to 25 per cent for those who show other benefits to the NZ industry, such as jobs and developing local talent.

* Medium-sized local television/ movies ($15-50 million): Government to take out up to 40 per cent 'equity' rather than simple grants, to get some profits if successful.

* Smaller local programmes/ movies (up to $15 million): rebates of up to 40 per cent, depending on local content.