John Key can't afford to give Hollywood any more concessions

Giving any business or sector special concessions of any kind is bad policy and bad in principle.

Prime Minister John Key’s visit to Hollywood today is not going to do him much good.

This is nothing to do with the many and varied conspiracy theories doing the rounds about the Kim Dotcom affair and any supposed connection with the prime minister's visit to Warner Brothers and other Hollywood entities.

The folks who believe all the tales surrounding our own Dotcom Bubble are people who already believe Mr Key is some sort of devil-spawn borne of Ayn Rand and a wolverine.

There is no political harm in rarking them up further – in other circumstances it might even have helped the government.

No, where the harm will be is in the indication Warners might want further government concessions to help make The Hobbit in New Zealand.

The studio has already successfully lobbied for a tweak to the labour laws and there are also tax concessions – admittedly, most around timing – for filmmakers.

But the admission the studio will want further concessions because of the high New Zealand dollar – and the government’s willingness to consider those concessions – is going to be damaging.

It seems the government will help large Hollywood studies who are hurt by the high kiwi, but New Zealand firms not so much.

It is difficult to see an upside in that.

Giving any business or sector special concessions of any kind from any government, especially tax concessions, is bad policy and bad in principle.

All it does is encourage lobbying, favouritism and the kind of poor economic performance – and a soft form of corruption – that bedevilled New Zealand for many years.

So for economic reasons as well as for the politics Mr Key would be better to tell Warners the same thing he and Finance Minister Bill English have told New Zealand firms over recent months.

Simply this: they will have to learn to deal with the kiwi dollar.

Politically, the government is already taking a hit after the events of the last month. Anecdotally, there are more grumbles about the butter-fingered way the prime minister has handled the Kim Dotcom affair.

I also understand National’s own polling shows it taking a considerable hit, not only in party vote but also in the prime minister’s popularity.

The pain being felt by exporters because of the high dollar is also having an impact, which is why the opposition parties are making such a big issue of it.

From a policy point of view, Labour, New Zealand First and the Greens are talking economic moonshine on the currency.

There is, in fact, little that can be done to lower the currency – at least, little that would not produce other, and worse, collateral damage to the economy.

But if Mr Key goes and gives concessions to one of the world’s largest companies because of the high kiwi dollar, while telling New Zealand exporters to, in effect, suck it up, all he is going to do is fuel his government’s critics and give the opposition more opportunity to spout economic nonsense.

That would be a double loss for the country.

rhosking@paradise.net.nz

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