Film Subsidies Playing Favourites
by Rodney Hide, MP

At Middlemore Hospital the new surgery centre isn't being used. Desperate patients, many of whom can't work because of pain, are kept waiting because there is no funding for their surgery.

At the same time the government has announced a $40 million annual grant for wealthy movie producers. Jim Anderton has said that new government hand outs will cover 12.5 percent of film and TV production costs so long as they spend more that $50 million in New Zealand. They can also qualify for the subsidy if they spend less than $50 millionÐbut more than $15 millionÐprovided the expenditures are more than 70 per cent of their total budget.

As an example of the subsidy Jim Anderton picked Walden Media's $170 million production of The Lion, The Witch and The Wardrobe. This film company recently announced they'd only film in New Zealand if they are given a subsidy. And the government caved in.

Walden Media is a Hollywood subsidiary of The Anschutz Company which is privately owned and operated by Philip Anschutz. Philip Anschutz is not short of cash himself. Forbes magazine estimated his net worth in 2000 at $18,000 million (US). That's the same as the entire tax take in New Zealand!

Kiwi film producer Peter Jackson used some of his profits from his blockbuster Lord of the Rings to build himself a well-earned mansion. And now it appears that his new film King Kong will make him eligible for a $25 million subsidy. But Mr. Jackson is a Kiwi exception. The rules set up for the subsidies are such that mainly foreign producers will benefit. The $15 million budget is high for local producers.

At the same time wealthy film producers are having funds showered on them by the government our farmers are being subjected to new taxes for sheep and cows, allegedly to comply with government's plans to implement the Kyoto Agreement. Struggling farmers will have to fork out an extra $8 million per year because their animals fart!

Our older citizens, who like a little sherry now and then, found costs going up by $6 per bottle because of a last minute tax the government pushed through. It's estimated to raise another $18 million for the government.

These two new taxes alone aren't enough to cover the film subsidies. The government estimates that this year alone they'll hand out $40 million in subsidies.. That's about $110,000 per day in subsidies to wealthy, mainly foreign, film producers. Two years ago 81-year-old Jack Power was told he needed an urgent knee replacement. He's still waiting due to a lack of funds! Yet subsidies to this American billionaire, amounting to around $21.25 million, have just been pushed through. It would take the full time yearly earnings of 3,000 Kiwis, on average, just to pay for this subsidy.

Of course one reason for the subsidies is to try and counter act other Labour policies which penalise businesses for investing in New Zealand. Red tape and taxes drive investment away and Jim Anderton is wanting to sweeten the pot. It's just that in the process he decides which pots get sweetened and which don't.

Instead of choosing favourites government should level the playing field. Why not push through $40 million in tax cuts instead? Is it right to pick some businesses, in these cases local businesses, and tax them so that you can shower funds on wealthy film producers?

It's not a bad thing that Mr. Anschutz is wealthy. And it would be great if his company made films in New Zealand. But why should we use tax payer funds to finance his business venture? Especially while other businesses here struggle to met tax bills which are climbing steadily under Labour.

Of course there's nothing chic about a dry cleaner or a corner dairy. Ministers don't put on their tuxedos, get their pictures taken with world famous film stars, or attend glistening world premiers for nothing. The publicity is good for them. Whether sacrificing local businesses in favour of film production is good for the country is a different matter entirely.

If government is going to subject business to taxes, allegedly justified because people are waiting for surgery due to a lack of funding, then the tax should be a flat one and the same for all. We shouldn't play favourites by penalising farmers and small business owners in New Zealand because they don't have any of the glamour associated with Hollywood type film productions.

Rodney Hide is a member of parliament and a board member of the Institute for Liberal Values.

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