It’s a tough job, but someone has to be Prime Minister. Someone has to get on that plane, fly to Los Angeles and have dinner with James Cameron and all his mates. And then traipse around the Hollywood studios, angling for a nomination for Best Supporting Country in the ongoing drama otherwise known as the film-financing industry. Yes, it’s tempting to sneer at John Key’s four-day tour of La La Land, but to be perfectly fair, the issues at stake are probably more important than many people realise. It is, of course, somewhat ironic that Key is getting on a plane to dine with Cameron, when the director of two of the most successful movies of all time – Avatar and Titanic – now owns a rather large property only an hour’s drive from the Beehive. But there will, indeed, be much to talk about, and we don’t just mean the latest exploits of Kim Dotcom.
In Cameron’s case, he recently hinted he might be interested in building his own film facilities in New Zealand, possibly in Auckland. Of more concern to Wellingtonians, however, is his talk of shifting some of the production of Avatar 2 and Avatar 3 to China. Like most businesspeople, Cameron is understandably in awe of such a huge and rapidly growing market. But he has also been frank that there are “economic advantages” in his moving some production there: the American studios are likely to get a bigger cut from box office sales in China with a co-production deal. That Cameron should be so open about his motives is hardly surprising. It is a well-known maxim in the film industry that “movies, like ladies of the night, go where the money is”. And therein lies the conundrum for New Zealand, which has already had a taste of how fickle the industry can be, when two years ago Warner Bros supposedly threatened to shift the first two Hobbit movies to another country, because of a stoush with the unions.
In that case, the Government was perfectly happy to take sides by changing the labour laws and offering a more generous subsidy for the films. Whether it can be persuaded to come up with further sweeteners remains to be seen. What also remains to be seen, by the public at least, is the result of a review earlier this year into the Government’s entire approach to funding what is known as the “screen sector”. The report was to consider, among other things, whether the scheme known as the Large Budget Screen Production Grant needed to be tweaked. The review was supposed to have been reported back to the Cabinet several months ago – and the public deserves to know what it says. Hundreds of millions of taxpayer dollars are at stake. Since the scheme began in 2003, it has been reviewed only once, in 2005. That review concluded the net benefit of the scheme, which these days offers a rebate of 15% of production expenditure, was possibly as high as $33 million. But it was also possible taxpayers had wasted up to $38 million.
Seven years on, the public is none the wiser, despite the fact that more than half a billion dollars has been handed back to Hollywood studios in that time. And there is growing concern internationally about what is viewed as a “race to the bottom”, as various countries try to outdo one another in luring major productions to their shores. Another issue is that the Government can only guess how much money it will need to stump up for the scheme in any given year. In the past financial year, largely because of the Hobbit movies, more than $90 million needed to be found – almost a quarter of the entire spending of the then Ministry of Economic Development. This year, about $50 million is expected to be spent. The Government has already made it clear it is not planning any radical changes to the scheme, and there have been hints it could become even more generous.
Instead of flying to LA, perhaps John Key should have stayed home and listened to American actress Eva Longoria, who was out here to promote a new TV channel. As Longoria told the Democrats at their national convention last month: “The Eva Longoria who worked at Wendy’s flipping burgers – she needed a tax break. But the Eva Longoria who works on movie sets does not.”