Last night I was teaching English to one of my students. She’s a young person who is interested in reading fantasy novels. She wanted to know what the phrase “parallel world” meant.

“Well” I mused, “it’s a place in the imagination. It has lots of things that are like the real world where we live now, but in other ways it is very different than the real world. It’s not really in the past and it’s not really in the future”.

And that, I thought as I walked home, is a great description of New Zealand. You only have to look at the recent debate around giving incentives to the film industry to realize that New Zealand may be one of the only places on earth where critics on both the right and the left have come together to condemn incentives for film production as a form of corporate welfare.

The incentive programme will offer grants of up to 12.5% to productions that spend more than 15 million and less that 50 million dollars in New Zealand. Progressive Coalition leader Jim Anderton helped to steer the idea through the Labour-led cabinet, which is no mean feat considering the opposition from Finance Minister Michael Cullen, who still has some fondness for the laissez-faire policy reforms brought in by his predecessor Roger Douglas. Previously, the only incentive offered to foreign productions amounted to a paltry $1 for every $8 spent locally. As a result, the major studios have done little work in this country.

It didn’t take long for some in New Zealand’s neo-liberal establishment to label the new programme as unsustainable corporate welfare. An article in the New Zealand Herald took pains to show that such incentives could (gasp) increase the price of labour making it more difficult for local filmmakers. This in a country that had previously relied on its scenery and “cheap labour” to attract foreign productions. One article cited a horror story from Australia that showed that incentive programmes in Sydney had been so successful that local producers actually had to do work in Brisbane to find cheaper labour.

However, criticism of the incentives didn’t come from just the neo-liberal right. Wayne Hope, a left media analyst at the Auckland University of Technology echoed the neo-liberal establishment and called the incentives corporate welfare on National Radio. A posting on Auckland’s left-wing Indymedia website warned that New Zealand could find itself in a “race to the bottom”. By wooing Hollywood productions, the author argued, we risked turning this country’s film production into a “service industry as opposed to a creative industry”.

It’s important to realise that in most countries, funding structures for smaller, independent and creative projects have always been different than the mechanisms available to larger productions. It’s no different in New Zealand. When smaller producers lobby for funding for creative projects, they don’t emphasise the benefits to the economy. Instead, they argue that local creative productions represent a social good.

But it seems that after years of ideological confusion, many on the left in New Zealand have forgotten what social democracy is all about. An incentive programme is an example of using the power of the state to deliver economic benefit for your country.

In British Columbia, a good old-fashioned social-democratic party created the B.C. Film Commission and developed a series of incentives that were so successful that Hollywood tried to prevent so-called “runaway productions” from locating in British Columbia. It hasn’t worked. Last year, when overall spending in the film industry declined, the B.C. Film Commission was able to show that production companies spent almost a billion dollars in the province. Some bottom.

If there is a problem with this incentive program, it’s the fact that the government will use grants instead of tax rebates. Tax rebates don’t cost the government anything. Grants come from budgets, which means that the government will be able to sink 40 million of an embarrassingly large surplus and pull it up again for an election year. That money could be better spent somewhere else.