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Brash Speech: Screen Directors Guild AGM

Don Brash MP Address to the AGM of the International Screen Directors Guild of NZ at the Kodak Theatre, The Production Village,

Freemans Bay, Auckland.

Thank you for the opportunity to speak here today.

I understand that it’s your interest in the big picture thinking of the alternative government, rather than any illusion that I might possess deep insights into the inner workings of your industry, which prompted the invitation.

And I do appreciate the opportunity to outline my current thinking.

However, may I first acknowledge the important and growing role which your profession now plays in this country, and in shaping its international reputation.

The talent, skill and creativity of New Zealand’s screen arts community has, over the past ten years, become increasingly apparent not just to New Zealanders, but to the whole world.

On the big screen, we can proudly point to some of the finest films made anywhere in the world being produced here. The Return of the King and Whalerider were for many among the very best films released last year, and films such as In My Father’s Den, Fracture, Sylvia and The Last Samurai show that the New Zealand film industry can both create, and support films that are the equal of any production anywhere in the world.

On the small screen, New Zealand has produced some magnificent work in recent times. Entertainment series such as The Insider’s Guide to Happiness and Bro Town prove New Zealand’s ability to produce cutting-edge television that is both well-made and creatively dynamic. New Zealand’s documentary makers also prove that we are able to make some of the world’s best television programmes.

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But the New Zealand screen industry is about more than just artistic excellence and artistic endeavours. The Screen Producers and Directors Association’s annual screen production survey shows that, in the 2003 tax year, the New Zealand screen industry generated around $330 million in foreign exchange earnings. By way of comparison, the wine industry generated $280 million in foreign earnings in the same year. This shows just how important the screen production industry is becoming for our economy.

It is important therefore that we ensure the right conditions for this success to continue.

While work is well advanced on policy for the next election, we are still some way short of being ready to release final policy. For that reason, I am unable today to give you any firm positions on a lot of the more specific issues that face your industry. However, I am able to give you an idea of the approaches that will underpin our thinking in this area.

I understand that some of you, at least, are interested in my views on the future roles of the state entities which play such an important role in your industry - Television New Zealand, NZ On Air and the like.

As I’ve indicated, it is too early in our policy process for me to announce details of policy in these areas. But I am perfectly happy to tell you where my own thinking is at.

If I am given the privilege of leading the next government of New Zealand, that government will have been elected with a mandate to do several simple, yet very challenging, things.

Clearly, one of those will be to change the way in which the Treaty of Waitangi figures in our legislation and our institutions. And that will be challenging.

Another will be to close the gap in incomes and therefore living standards between citizens of this country and our nearest neighbours, Australia. Adopting the goal of shifting this country's economy up a gear, or even two, is, in my judgment, utterly essential. But I do not want to pretend that it will be easy.

The great New Zealand sailor and conservationist Sir Peter Blake, whenever he was confronted with a proposal to spend Team New Zealand America’s Cup funds on a new initiative, always asked: will it make the boat go faster. And that is the test which I intend to apply to our policy making.

So while you can argue all manner of interesting philosophies about the role of the state in owning television channels, I am not particularly interested in wasting time with that debate. My question is simply this: will changing the ownership of TVNZ make the New Zealand economic boat go faster? The answer, I suspect, is that any proposal to do so would prove a giant distraction from the real task at hand. Getting distracted by arguments about the role and ownership of TVNZ will most certainly not make the New Zealand economic boat go faster. So let's concentrate our energies and our policy debates on the things that will matter - the things that will make the boat go faster.

The National Party believes New Zealand on Air plays an important part in ensuring New Zealand voices and images are seen and heard on our airwaves. As a result, National has no plans to diminish the role and function of New Zealand on Air. However, we do have some concerns with the prioritising of funding, and some of the processes involved in the spending of New Zealand On Air’s $105 million.

First, let me make it clear that National does not support any proposal to redirect all of New Zealand On Air’s television funding into Television New Zealand. National believes that such a move would be anti-competitive. It would destroy the vibrant independent television production industry in New Zealand, and have a serious impact on the amount of New Zealand content seen on TV3.

I have already outlined the value of the screen production industry to New Zealand. Therefore, I can promise you today that a National Government will not require any set level of New Zealand On Air funding for Television New Zealand, and will ensure that all funding from New Zealand on Air is allocated on the basis of merit.

My colleagues and I do have some concerns over some of the funding decisions made by New Zealand on Air. The most recent example is the decision to fund, through an unsecured loan to the tune of $450,000, New Zealand Idol.

While this was a high-rating and enjoyable production for many, it was also highly profitable and relatively guaranteed of success. The same format had already been a ratings winner overseas, and New Zealand’s previous attempt at a similar series, Popstars, had also been very successful.

But that loan technically broke New Zealand On Air funding rules. The rules clearly say that overseas formats could not be funded. That forced New Zealand On Air to funnel the payment through Television New Zealand.

Adding to the inappropriateness of the decision, the show also involved a texting system that reportedly received a huge response. The text messages cost those sending them $1 per text.

Surely, the purpose of providing taxpayer funding through New Zealand On Air, is to ensure that some productions which are deemed to have value to our country and which would otherwise not get made actually do get made.

If I am leading the next government, New Zealand on Air will be reminded very firmly of that brief.

National also believes that New Zealand on Air is the appropriate body through which to ensure that high quality, relevant New Zealand content is seen on our television screens.

Labour’s decision to restructure Television New Zealand and subject it to a charter has resulted in hundreds of millions of dollars of value being wiped from the company.

The result has been a situation where the Government has been required to sink millions of dollars of support into the broadcaster. In this year’s Budget, Michael Cullen said this funding would rise to more than $17 million in the coming financial year. This is a sad situation given the strong financial returns TVNZ once provided to New Zealanders.

On the big screen, National recognises the valuable role the Film Commission continues to play in the production and overseas promotion of New Zealand films.

Since its inception in 1978, the Commission has been at the forefront of ensuring films such as Whalerider and Once Were Warriors were made and enjoyed international success. Indeed, I had the pleasure of seeing Whalerider at a promotional viewing in Beijing earlier in the year.

However, some recent Government initiatives in the field of movie production have been less than entirely sensible. The $40 million per annum Large Budget Screen Production Grant is an example of the type of interference and picking of winners that I believe is unfair, and unnecessary.

Rather than providing all filmmakers, whether New Zealand based or foreign, an equal playing field where all are advantaged by lower tax rates and lower compliance costs, Labour has instead set up a scheme that benefits large Hollywood studios and provides the Prime Minister with photo ops with movie stars.

It also seems strange that Michael Cullen would constantly claim that cuts to the company tax rate would benefit only rich foreign company owners, while providing millions of dollars of tax-free grants to Hollywood movie companies.

National believes a lower company tax rate, lower compliance costs and more flexible employment legislation would provide far greater incentives for producers to choose New Zealand as the base for production of their films.

In that respect, the current direction of policy is revealing an alarming pattern, with Labour attempting to take New Zealand backwards in a number of areas, while ignoring looming difficulties in other areas.

These changes will inevitably have profoundly negative consequences for entrepreneurial and creative businesses such as yours.

Consider, for example, the recent Holidays Act shambles and the partial and inadequate attempt to paper over the cracks with amending legislation; the extremely damaging Employment Relations Law Reform Bill passing through Parliament currently; the unwillingness to adequately reform the RMA; the complacency in the face of our looming energy crisis, and transport gridlock in a number of our major cities, courtesy of an impasse between Labour and the Greens; the inability to get adequate performance from core government functions in spite of large boosts in spending, as evidenced by our sub-standard education system and bureaucratically challenged and financially struggling health system; and the freeze on our company and personal tax rates while all around us our competitors are lowering theirs.

All of these things have a direct impact on the productivity of our businesses. If we miss opportunities to lift our game in these areas, we will be missing opportunities to lift the incomes of all New Zealanders.

We want our competitive advantage to be our landscape, our infrastructure and our expertise - not our low incomes.

If we want a nation of entrepreneurial flair, we must get the incentives right. The benefits of rising incomes must get through to the people that earn them.

National Party tax policy is to focus on tax relief for low-to-middle income working people, particularly families. We support a cut in the corporate tax rate to at least equal the Australian rate, and a gradual reduction in the top personal tax rate.

We take high marginal tax rates seriously. They must come down.

When Labour lifted the top tax rate to 39%, they said it would affect only 5% of workers. Well, they haven’t changed the income thresholds as incomes have risen, and now around 20% of full-time workers are in that range.

Too often, people have a static conception of incomes. The real world is dynamic, not static. Of those in the top tax bracket, typically only about 60% will still be in that bracket three years later. As you know, in business, incomes can be highly variable.

This Government has put in place a tax system that punishes you for having the cheek to successfully build your skills and your business, that punishes you for being successful, that punishes you when you are having a good year.

And one of the major sources of compliance costs for business is the tax system, ably assisted by the RMA and OSH. I know how difficult it is to reduce these costs, but I know that we must.

These areas are some of those where change will most certainly make the boat go faster.

When you review the range of policies that are holding New Zealand back, it becomes clear that there is much that can be done to lift the income-earning potential of New Zealanders. Much of it is not even that difficult – it just requires some political determination.

If we can get our infrastructure sorted out, if we can reduce the cost of planning consents for those brave enough to try something new, if we can stop taxing business and personal cash flow away, and if we can reverse the current re-regulation of the labour market, there will be substantially positive effects for all New Zealanders.

That benefits all businesses, including, of course, locally funded and produced films. Nowhere is that clearer than in the field of employment legislation, which is of particular relelevance to you, of course, after last year’s Employment Court decision on the status of a set model technician from the Lord of the Rings.

The court ruled that he was an employee even though he was actually employed as a contractor. It’s a decision which has wide-ranging and potentially costly ramifications.

Now, rather than the parties to a contract deciding what their status is, the court can decide what the nature of the relationship is, even where the worker is stated to be a contractor.

Margaret Wilson and the Government ignored repeated warnings about the dangers of introducing this change back in 2000. The previous definitions were clear and workable.

Now, we have a system where the contract between the company and the worker means nothing; the court decides, based on a set of abstract criteria.

That’s particularly worrying for your industry because once the court decides that a contractor is in fact an employee, all the usual rules of unjustified dismissal then apply. That decreases the flexibility for producers and increases the compliance costs and the risk associated with employment.

I can promise you that National will repeal the Employment Relations Law Reform Bill currently before Parliament when we become Government, and we will substantially review and rewrite the Employment Relations Act.

The new law will bring more flexibility to the New Zealand workplace.

New Zealand should be rightly proud of the work that you produce.

The big and small screen production industries in New Zealand have proved to be both artistically and financially successful, with New Zealanders at the forefront of the industry worldwide.

However, we must not become complacent. National’s prescription of lower company taxes, lower compliance costs and more flexible employment legislation will ensure we remain one step ahead of our competitors.

National recognises the social and financial benefits that have come from the growth of the industry in this country. That’s why National is committed to ensuring that New Zealand continues to produce talent like Peter Jackson, Roger Donaldson, Nikki Caro, Lee Tamihori, Vincent Ward and Jane Campion. That’s why National is committed to providing an environment where New Zealand’s screen production talent can excel and develop the skills necessary.

The screen production industry has become an important part of New Zealand’s identity, not just telling our stories and taking them to the world, but also allowing our talents to shine and produce stories for the whole world.

I believe that with National’s help, New Zealand can become the first choice for the discerning producer.

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