What is it about Hollywood that causes the Government to go weak at the knees? To ensure the next three Avatar movies are filmed in this country, it has now offered the sort of concessions that might be expected of the most star-struck of teenagers. An initial disinclination to provide more generous incentives to film-makers has given way to a virtual capitulation.

Not for nothing was 20th Century Fox's Paul Hanneman yesterday referring to New Zealand's "unparalleled support to films of this scale". The cost of that backing will be measured in millions of lost revenue dollars and an industry which, unlike almost any other, continues to believe it will be subsidised to survive.

The next three Avatar films will be made in New Zealand, the Prime Minister has announced at a press conference with the film's director James Cameron. Mr Key announced that the Government had signed a memorandum of understanding with the film's makers to secure the multi-film deal. He said investment would be "significant" - a minimum of $500 million for the three films.

Not so long ago, the Economic Development Minister, Steven Joyce, was adamant the industry must stand on its own feet, and that increasing incentives to match those of other countries represented an ultimately fruitless race to the bottom. Support for that view came from an in-depth review by the Treasury, the Ministry for Building, Innovation and Employment and the Film Commission. It recommended the rebate for major film and television production should remain at 15 per cent. Yesterday, however, Mr Joyce announced the rebate had been hiked to 20 per cent, a rate that will increase to 25 per cent for productions that have "significant additional economic benefits" for this country. As Mr Hanneman effectively confirmed, New Zealand has, indeed, reached the bottom.

The Government made great play of the spending of at least $500 million on production activity in this country, including most of the Avatar movies' live action shooting and visual effects. It also pointed to 90 per cent of the live action crew being New Zealanders. But the memorandum of understanding for the three films falls some way short of committing James Cameron, the director, to these. They will be fulfilled only if this country has the "capacity and capability" to meet the production requirements. Mr Cameron has the wriggle room to take shooting and visual effects and post-production work overseas if he wishes.


Mr Joyce said that he expected the Avatar films would qualify for the 25 per cent rebate. The spending on production and the employment of more New Zealanders seem the only justifications for this. The likes of the official red carpet premiere of one of the films being held in this country offer largely a feelgood factor.

The Lord of the Rings and Hobbit movies at least provided an obvious tourism benefit in terms of this country's image. Even then, it is hard to quantify this, and it was certainly not worth the incentives and changes to the workplace law that were required to retain the filming of the Hobbit here. Seeking to link the Avatar movies to this country's image offers even less, given that it is already ingrained by Sir Peter Jackson's films. In all this, there is more than a whiff of the Government's similarly ill-judged $30 million subsidy to keep the Tiwai Pt aluminium smelter open.

One definite plus, however, is that Cameron's presence means the local industry depends less on Sir Peter. The American film-maker was keen to stress that the agreement with the Government was not just about Avatar but a longer-term lifting of the local industry. That must be the focus. Racing against other countries to offer ever-greater subsidies and relying on work for overseas producers will always end in grief. Already, Cameron has said he would like even bigger rebates. At some point, however, local film-making must be based more on production ownership and control over intellectual property. The deal for the Avatar films only postpones that day.

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