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Avatar deal part of long-term fix for local film sector

A government deal that's upped the rebate incentive scheme for big budget movie productions and secured the next three installments of James Cameron's Avatar series is part of a longer-term solution for an industry at risk of stalling.

The deal will give Avatar's producers Lightstorm Entertainment and Twentieth Century Fox a 25 percent rebate for spending of at least $500 million, in return for all of the principal filming, at least 90 percent of visual effects and post-production on at least one movie will take place locally.

The lift in the big screen incentive to 20 percent from 15 percent and introduction of an additional 5 percent for meeting special criteria is something the government hopes will make the local screen industry able to foot it against more attractive sweeteners overseas, amid signs the sector is coming under increasing pressure.

Government figures show New Zealand's screen productions generated some $1.09 billion in revenue in 2012, with $578 million coming from post-production, about half of the entire screen industry. Of the 2,667 production and post-production businesses, just 15 generated at least $10 million.

Cameron told a briefing in Wellington it will incumbent on senior film makers such as himself, Sir Peter Jackson and Andrew Adamson "to take responsibility to keep the industry vigorous and on even keel over times so it doesn't have these kinds of feast or famine kind of cycles."

New Zealand's film labour market is "very well-trained" and highly disproportionate to the country's population of 4.5 million people.

"You've got a broad skill set when it comes to crew, shooting crew, set construction craftsmanship is of the highest order, you've got design capability, visual effect that are world class so it's all right here," Cameron said. "Frankly we like that we have to maintain that."

Still, the local screen industry lacks capacity in physical infrastructure such as stages, and would struggle to cope with too much international work.

"The answer ultimately, will be to have the kind of capacity that Weta Digital has, on the stages and physical infrastructure as well.

"Weta Digital can for example, can handle the enormous task loading of The Hobbit trilogy for example, and still have additional capacity for other mid to large features," Cameron said.

"I think that the physical production infrastructure has to anticipate that as well," he said. "I think right now it might be hard pressed to do an Avatar and another film of that scope at the same time."

That opens up the opportunity for the new film studio complex contemplated in Auckland, and Cameron said that project should be contemplated.

A Cabinet paper accompanying the government's July review of the screen production incentives, which sought to attract more television productions to New Zealand, said officials advised there wasn't a strong case for central government intervention to develop screen infrastructure, with signs the market would "spot profitable opportunities to provide infrastructure as the industry grows."

The other leg to the plan was the separate announcement combining the government's Large Budget Screen Production Grant (LBSPG) and Screen Production Incentive Fund (SPIF) into a single scheme called the New Zealand Screen Production Grant.

Existing rebates of 15 percent for the LBSPG and up to 40 per cent for the SPIF will be replaced by two rebates - 20 percent plus an extra 5 percent for productions that meet special criteria and up to 40 percent for New Zealand productions.

The new incentive scheme aims to support New Zealand productions between $15 million and $50 million. Instead of providing those mid-tier productions a grant, the government will take on an equity stake to recoup some of its investment. That might be between 10 percent and 30 percent, according to a Cabinet paper released as part of today's announcement.

Economic Development Minister Steven Joyce said the Avatar incentive is seen "as a short-to-medium-term solution, with the long-term solution building up our strong creative IP (intellectual property) in this country along with the international work."

Dove-tailing in with the incentive tweaks, the government secured Cameron and his fellow Lightstorm producer Jon Landau as founding members for a new advisory board to foster local talent for at least five years.

Cameron said he hasn't dealt with the local film industry at that level, and it will be completely new for him.

"I'm doing it happily. It's something I would feel it was incumbent on me anyway so it was easy to agree," Cameron said.

(BusinessDesk)

Comments and questions
4

Why one sector of business gets a handout I can't fathom. If the industry cannot survive on its own, without socialist policies, then the industry should fold in New Zealand.
I'd prefer the money government is handing to foreign filmmakers and their imported actors and technicians to be used to help improve the country's IP.
Deep down, perhaps Key fancies himself working in Hollywood at some time...

Rest assured, the country's IP will benefit immensely.

Been there done that and it did not work so lets put in more money. When the last lot was done it was to build the industry etc and make it sustainable what failed?

Clearly I am a believer of Free Markets but when you are competing in a non free market, you have to strike these types of deals. And lets be clear, in a true free market, tax rates would be significantly lower so these incentives wouldn't be required in the first place.

There is has been too much invested in the stored IP of the NZ film industry to let it go stale. I applaud this policy.