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More hobbits please, Mr Key

OPENING SALVO

My children have decreed that I shall attend The Hobbit

I shall do so under protest. 

Enduring the three-hour long Fellowship of the Ring was enough for me and I am now the grumpy old bastard who won’t watch Air New Zealand’s new hobbit safety video.

I am also deeply ideologically opposed to governments doing deals with individual companies, whether Mediaworks, SkyCity or Warner Brothers.  At best, it risks misallocating resources.  At worst, it creates crony capitalism.  Always remember that it was Sir Robert Muldoon who first played silly buggers with the tax laws to benefit the movie industry.

And yet …

3000 jobs
In 2010, local union bosses Robyn Malcolm and Jennifer Ward-Lealand put The Hobbit at risk, backed by Council of Trade Unions supremo Helen Kelly, Australian union boss Simon Whipp and Phil Goff’s Labour Party.

Similar threats had been made, unsuccessfully, against Outrageous Fortune.

The detail of the dispute was never made clear – Ms Malcolm and Ms Ward-Lealand wailed that they just wanted to talk, and prattled on about the long-since-repealed Employment Contracts Act – but its essence was that foreign actors’ unions wanted to reduce the competitiveness of New Zealand’s film industry against their own.

There was talk of a global union boycott of New Zealand films.

In a wonderful display of defiance against union thuggery, local actors took to the streets to harass and abuse Mr Whipp, despite him claiming to speak for them.

John Key, Gerry Brownlee and Steven Joyce then became involved, and controversially provided VIP treatment, including government limousines and airport facilitation, to Warner Bros executives.

On the face of it, the deal they struck at Premier House was outrageous.

New Zealand employment law was immediately changed to suit the company and criteria for Trevor Mallard’s Large Budget Screen Production Fund expanded to deliver more cash rebates.

In fact, the prime minister gave nothing away.

The amendments to the Employment Relations Act simply clarified that someone who got a part riding a warg around the South Island for a couple of months was a contractor and couldn’t claim to be a full-time warg rider.  They were nothing a National government shouldn’t have done anyway.

Mr Brownlee also noted that Sir Peter’s Return of the King had been one of the biggest selling DVD of all time.  He suggested that, in return for the concessions, Warner Bros be required to include a video promoting New Zealand, to be made by no less than Sir Peter, in all downloads and DVD packs of the movies for all time.

The Sound of Music affect
While Mr Brownlee’s insistence irritated the Warner Bros executives, who would have preferred a free lunch, they agreed and the value of that promotion will vastly exceed its cost to the taxpayer.

The deal also made Tourism New Zealand a strategic marketing partner for Time Warner, by some measures the largest media company in the world.

While it seems implausible that anyone would fly across the Pacific to see where a film was made, tourism experts insist otherwise.

Their market research suggests that Sir Peter’s movies are the single biggest factor raising awareness of New Zealand as a tourism destination at the present time.

Nearly 50 years on, Salzberg still attracts tourists who believe its hills are alive with The Sound of Music.

The government can also to point to 3000 jobs which would have gone offshore had the union campaign been successful.

It’s also better that Air New Zealand has the vulgar hobbit safety video and plane than Qantas or British Airways.

What’s more, by all accounts, the movie is good enough to be nominated for Academy Awards with all the publicity that will bring, sending a message to other studio bosses that New Zealand is a place where they can make history-making productions.

Deal making
For better or worse, when Mr Key deposed Don Brash as National Party leader it was interpreted as a shift from a strict belief in markets to more Singaporean-style corporatism.

Voters also continually endorse greater government intervention.

The Hobbit deal is one Lee Kuan Yew would have done.

In doing such a deal, Mr Key cannot be criticised for governing the way he promised.

If there is criticism, it is that he hasn’t done enough of them.

More by Matthew Hooton

Comments and questions
22

Very interesting perspective, Mr Hooton.
I share your ideological opposition but accept as you do the benefits. Singapore was a good analogy I hadn't considered, but in my typical cynical fashion I trust the media tycoons and those who play in that sandpit as far as their storylines. It's all just theatre and fun while it lasts.

Agree Matthew
While, like you, I am ideologically opposed to Govt deal making, it does seem to have paid off in this case.
Congratulations to Sir Peter Jackson and his team for creating a new income stream.

Yes, how dare the actors (who are workers too -- have you ever had to spend hours doing something again and again and again until you get it perfect?), express their desire to join a union and bargain collectively, what other workers enjoy every day, as well as things like sick leave, ACC and holiday pay.

And I suppose you applauded the closure of the Hillside workshops. The jobs lost there were just high wage, high skill union jobs with good conditions. Jobs are only jobs if you are an independent contractor getting paid bugger all.

Hooten, do you have an agenda to drive down wages and conditions in this country, and prevent workers from joining unions and bargain collectively?

(have you ever had to spend hours doing something again and again and again until you get it perfect?),

Millsy has clearly never listened to Matthew perform on radio

You really have no idea, Matthew. The actors action resulted from performers not being allowed to share in the massive profits from their work in LOTR. As a result of the action there are residual payments for those actors contracted to (not employed by) The Hobbit.

Good summation.

Interesting how often people we meet in distant places refer to LOTR when we answer questions about where we are from. One I recall, in the back country of Tibet, also commented on the beauty of New Zealand, as he saw it.

I don't want to see the movie but, if I give in, it will be to see the scenery. That is all I recall enjoying in the previous trilogy, with so much filmed in my "growing-up" country. Nonetheless, well done, Sir Peter.

People always moan about how we 'changed the law for Warner Bros' but that seems like the least objectionable part of the deal. If New Zealand is missing out on thousands of jobs because of poorly written statutes/regulations the obvious answer is to change those regulations.

And yes, people working on movies are obviously appropriately classed as contractors.

If New Zealand is to move beyond dairy and trees for economic activity then it seems that feature films are a reasonable way to create a skilled computer literate workforce.

With Peter Jackson in residence in Wellington, and now James Cameron taking an estate in the Wairarapa it seems that New Zealand is uniquely placed to have a couple of significant movie decision makers base their blockbusting cinema productions here.

It's a shame that we have to give the productions a GST holiday in order to cement the deal - but if that's the cost of the business then I think that the economy is still in better shape with the deal done ... rather than seeing it go offshore.

@PJK I think pragmatism won the day, thank goodness. Ideology is emmotive and rarely practical. I agree totally that we're better off for actually fighting to hold on to this industry. Perhaps NZ needs to be a little galvanised about a few other industries, too, lest we stay a slave to commodity markets forever. I would personally like to see Robyn Malcom stripped of her citizenship for being a patsy to the Australian unions, but we don't live in an ideal world now, do we.

The actual changes to the employment law rely on a nice distinction between video and film technologies, as the changes do not affect the video industry. Because a law based on nit-picking differences in technology is unlikely to be good law (It is interesting that some viewers commented on the new 48 frame filming being akin to a high quality video rather than film) and this would be known to the people drafting it, I would guess that the real purpose of the legislation was to appease a Warner Bros rather than provide truly cast iron unassailable assurance against any possible union unrest- appearance over substance.

The employment law “change” was actually a “clarification” that was very much needed – as Labour had created such poor legislation in the first place it had gaping holes in it that would have also allowed the unions to ‘go on strike” and just like the PoAL / MUNZ fiasco the unions have created, they would have held the LoTR films and it’s backers to ransom until their demands were met.

That is why Warner Bro’s needed to scout out other locations – because who would want to invest a few hundred million, be far too far into production to stop /turn around …and then be held to “legal” ransom for union extortion? Hence the desperate need for this clarification.

The stroppy unions didn’t like being slapped back into reality and told they don’t have the elected mandate to dictate who can and can’t come to NZ to live and work in what ever capacity the elected government wanted… so they started a smear campaign that wasn’t combated… and still isn’t. We got to constantly hear that our legislation was for sale to the highest bidder, crony capitalism etc etc

The massive irony is the squawking of the unions trying to derail the films only highlighted how poor NZ’s employment legislation was and still is, as well as the complete dis-service the unions play towards NZ Inc and her overall productivity.

And these union clowns are the main funders / 20% of the Labour Party. ‘nough said.

Why do we need an interloping 3rd party, who are often illegally operating in the first place, who pit worker against employer… and all mainly for the unions benefit? Looking at the toxic, corrupt behaviours of unions on both sides of the ditch – I still wonder in perplexed amazement how their behaviours can be legal and conducive to ethical / moral commercial activities?

National need to change the law, making unions responsible and accountable for collecting their own membership fees from their own members – not it being the responsibility and cost of NZ employers. Totally ridiculous and obviously set-up by a previous Labour government

I was glad to see the analogy of Salzburg, Austria. I went there in 2007, a city that has a significant tourism business. There was 3-4 bus tours available but the one with the biggest queue, day in day out, was the 'Sound of Music' tour.

Pardon being the spectre at the feast...

While hundreds of millions of dollars will apparently accumulatively flow into the country, the catch is that apart from all those involved in the tourist and film industry and its spin-offs, none of it apparently ends up in the hands of most NZers, whose pockets were raided for tax relief to benefit multi millionaire Peter Jackson with grants to make the films and with handouts to the American filmmakers makers.

Pragmatism is all very well, but along the way most New Zealanders are not benefiting from what they have been forced to contribute.

Perhaps in future, the pockets of those who stand to benefit directly from the largesse of government wanting to attract filmmakers of the country could be targeted and raided - instead of the man in the street.

@Cassandra - Weta group of companies are the single largest employer in Wellington after the government. A cynical view would be that all of the film's budget was spent on goods and services, and we would be even. Obviously, a lot of the budget goes on salaries and contractor fees, taxed above 15%. It's a profitable move for the govt.

As for only the impact of the production, I think it's fair to say it has a much wider reach that you give credit, and benefited a lot of men in the street...

6750 domestic flights were taken
19 commercial properties were leased long term
93,000 hotel bed nights were sold
1800 rental cars were hired
1650 work vehicles were used
$380,000 was spent on coffee
$9,180,000 was spent on set construction materials (with local suppliers)
approximately 16,000 days were worked by New Zealand actors
$1,450,000 was spent with local food suppliers

What you say, Anonymous, simply bears out the point I am making.

The benefits flow to a very restricted group of New Zealanders. But the rest are constantly required (ie, have their own income deducted) to contribute to the gains for a few.

I am also ideologically opposed to the protectionism that the Hobbit was given so it could be made here. However, like another correspondent, NZ is known because of the LOTR in overseas jurisdictions. Most people say they would love to come here because of what they have seen in LOTR.
My real point is why were the railway workshops in Dunedin not given protection. It's not as though the Koreans and Chinese made a better product as they needed extensive repairs on arrival here. Why do we not protect more of our industries to make sure that the technology that goes into producing some of these items stays here. Also, why is it that citizens from countries where we have a snowball's chance to acquire property are welcomed here and given carte blanche to acquire NZ assets?
Rather than selling off our country to these regimes maybe we should use it as a bargaining chip in FTAs.

Quite.

The rationale for securing the Hobbit - give something away to keep the business - appears not to have been applied to the trains.

Mind you, it never is when it comes to trains. Roads cost us all a bundle, but railways? Sorry, they have to make a profit.

OMG. "Roads cost us all a bundle, but railways? Sorry, they have to make a profit." Think before your rhetoric! Roads are paid for (and more) by taxes on road users (road user charges and petrol taxes). There is no such impost on rail (indeed, roads subsidise rail).

The rail workshop died because they were too expensive - the minimum wage laws make it illegal to pay their staff what they were worth.

Too simplistic, Anonymous. Nony Mouse is right.

Somehow New Zealand no longer belongs to New Zealanders.

Left right and centre their jobs are going, they are facing unfair competition from manufacturing, and we are allowing our land and assets to be removed from the hands of New Zealanders by those who can well and truly afford to outbid us - and to displace us.

The damage both Labour and National governments have done in this area has been destructive and is going to become even more so.

Are you aware that a new Reserve Bank act now makes it possible for any failing and mismanaged bank to raid its depositors' accounts to get itself out of a mess... on the basis that they too are responsible for the bank's losses and should bear the cost.

How utterly outrageous - And no doubt this same bank's CEO would not relinquish any multi-million-dollar salary or bonus.

We are sleepwalking towards what Hilaire Belloc described as a servile state.

Already, for example we have a non-elected, un-representative Minister of Treaty Negotiations, famous for his unpleasant tongue, and so hugely biased towards the ever-inventive iwi claims that he actually invites them to bypass the courts and come directly to him... being judged by some sycophantic blogsite as the best performing politician of all.

Democracy has long gone from this country.

I know, why not make it compulsory to assemble all cars sold in NZ actually here in NZ? That would create a lot of jobs. Ban Jap imports, too. Never mind that it will double or treble the price of cars, including secondhand ones! We must have more jobs manufacturing cr*p in NZ.

The assertion that everyone swallows uncritically was that the Hobbit was ever "at risk" (of not being made here). The only evidence for that as far as I can tell is the word of Sir Peter Jackson. My question is that if a world-class film director in the top handful of his profession, backed by enormous media giant, doesn't have a say over his location scouting, then there ain't much point being at the top of that profession, is there?

Not much point paying for something to be done if you don't have a say in how that money is spent either...