The story of subsidies

There is something jarring about hearing millions of our taxpayer dollars are going to subsidise behemoth Amazon for its Lord of the Rings television series being filmed here.

It is expected $162million could be dished out for the first series and a memorandum of understanding has been signed with the Government allowing Amazon to claim a 25% rebate of almost all its spending in the country when most other productions only qualify for 20%.

For many, it rankles that we are giving anything to such a global giant (remember, Amazon founder Jeff Bezos has been touted as being the richest man in the world), particularly one with a poor reputation for its treatment of workers.

Act deputy leader Brooke van Velden said she did not think a company that made more money last year than this country needed any financial help from the Government.

There are many unanswered questions around this.

It can be argued, as indeed finance minister Grant Robertson has, that if you want a film industry and other countries are offering subsidies then you have to be in to win and this is part of the price you pay.

Also, we have developed considerable expertise here over time and even if our local film industry ramped up it could not take up all the slack if international productions disappeared.

But do we know how much some of the big international productions may be compromising smaller New Zealand companies’ abilities to attract staff?

The hard-hearted would say that is just the marketplace at work, but if it is affecting our ability to tell our stories and express our culture, or develop other home-grown enterprises in the entertainment field, is that a price worth paying?

Those on the other side of the subsidy argument from Mr Robertson might suggest it is a race to the bottom and that, ultimately, we will lose to countries prepared to stump up more than we are.

Economic development minister Stuart Nash has described the deal with Amazon as "fantastic", gushing about the world’s most innovative company deciding to come to this country when it could have gone anywhere.

He seems to have been dazzled by the fact Amazon is spending $650million and convinced that we will grow our film industry and will be able to "leverage off some of their really innovative technologies and ideas".

The trouble is, we do not know exactly what the proposed innovation programme which appears to have been agreed, will involve. Stuff reports say this programme obliges Amazon "to build a wider relationship between New Zealand and the Amazon group".

A less gung-ho attitude and closer examination of the supposed gift horse’s teeth might have been wise from Mr Nash.

Also, since this deal was completed at the end of last year and one of its selling points to the public seems to be the tourism benefits, we wonder at the value of this in the next few years, given the Covid-19 situation.

How powerfully did our Government negotiators promote our Covid-free status, which Ms Van Velden described as a better subsidy than any film subsidy grant, as a selling point to Amazon?

We do not know yet when tourists, apart from those from Australia following the opening of the transtasman bubble, will be returning here, and, in any case, is it possible we have already wrung most of the juice out of the Middle-earth tourism rag?

Perhaps it is time for a wide-ranging discussion about subsidy priorities, the level of them, particularly in these cash-strapped times, and whether we need to do more to establish if the benefits are all they are cracked up to be.

Comments

Fascinating.

I remember a debate, mostly in 'The Listener', when Peter Jackson's 'Lord of the Rings' trilogy was being promoted. People, mostly associated with the Labour Party, shrieked and raged that this was money wasted in support for what would be a straight-to-DVD production.

Near thirty years later, and a new generation of Labour politicians, now holding the reins, there appears to be another view. Only in hindsight will we know if this is as far-sighted as the Bolger Government's punt ... It is a gamble.

Just don't cross picket lines.

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