You've nailed it, thanks Roger. Many other things can be added to this list, like "green" energy and climate change where economic modelling is, at best, sparse.
Spot on and so excellently expressed! This should be on the front page of the Herald! While some lofty ambitions and subsequent bad decisions might stem from a basic lack of economic acumen there is a good deal of hypocrisy and greed involved as well.
Let’s be honest. Preserving ‘heritage housing’ in leafy suburbs is in truth protecting property values for abodes which began as workers cottages or modest family villas but are now million dollar McMansions with only the Resene facades retained.
Fascinating read. The idea that some beliefs are a kind of “luxury”, affordable only to those insulated from their consequences. It really makes you rethink how status and morality intersect. Makes me curious about where true value lies, beyond signaling.
Bravo Roger and (like most) I applaud your eloquent exposure of the facts.
But debate on this subject has become focussed on "arts" and fails to acknowledge the far more important and best of many points you've made including e.g. so-called "fossil fuel" to provide electricity when useless "renewables" (like solar, wind and... even hydro) fail. ALL "renewables" except nuclear are intermittent and dependent on sun, rain and... wind.
My question is: why does Huntly Power-station (our ONLY reliable backup to unreliable "renewables") have to run on coal imported from Indonesia (or anywhere else)?
Huntly was deliberately (and sensibly) located on top of and adjacent to vast New Zealand coalfields (The Waikato Coal Region)!
Have successive stupid New Zealand governments taxed onshore coal mining so that it's less costly to import coal? (Taxing must include so-called "carbon credits".)
Ideals are not reality. Idealists often formulate policy based on abstractions i.e., purely on ideas, not drawing on premises that are rooted in actuality (i.e., the real world), on what is achievable, and at what cost (and to whom). When such people and their righteous causes are opposed, it is a short step to fanaticism, whereby coercion and draconian measures are inflicted on the rest of us in the name of the cherished cause. We saw this in the pandemic, we see it from climate change activists, and we see it in the safety-first culture currently permeating pampered western societies.
Film is a rebate on money spent. Not a subsidy. A small rebate on new money coming into New Zealand. Without the rebate in place, that money would never come into the country
The dollars are not “new” – the studios must first buy existing NZD from someone who already holds them, just like any other investor or customer who spends money in New Zealand. Once you see that, the film rebate is simply a subsidy: taxpayers pay part of the bill to induce one particular kind of spending, no different in principle from giving a 25% rebate to any favoured industry.
Phil, implicit in your question is the claim that it is worth taxpayers paying your studio $25 for every $100 you spend on wages, rent and other local costs. Why should film get that treatment when every other business meets those costs without a rebate?
If "spend here or we go elsewhere" justifies a 25% subsidy, why not offer the same deal to data centres, call centres, or manufacturing plants? All bring "new money" and all would spend it elsewhere without sweeteners.
So why film? Because nobody gets photographed cutting a ribbon on a server rack. Strip away the glamour and what remains is national vanity dressed up as industrial policy.
And even then, there is what economists call crowding out. The workers, hotels and tradespeople you use would not sit idle without the rebate; they would be employed by other firms – in tourism, construction, events. The subsidy does not create resources; it reallocates them, with taxpayers paying one favoured sector to outbid the rest.
This is the economist answer. One with no real world understanding. Any worker knows that getting $100 handed to them, and returning $25 (after many months) is a very, very good deal.
If other industries are capable of achieving the same deal, they should be go for it. It would bring money into New Zealand.
Your example is flawed though. A server farm is an asset investment that benefits the owner almost exclusively. Outside of the initial construction.
A film employs hundred of New Zealand contractors across multiple industries for months and months. Then leaves. With no negative impact on the environment. Having spent all their money on that project. They then come back a few weeks later and do it again. And again. And again.
It's a great investment into New Zealand.
If other industries can find a similar pathway, they should go for it.
The economist argument again that film workers would do something else is the classic unimaginative, no creative argument from someone who lives in a theory world and has never created anything artistic, who doesn't have an artistic bone in their body. Unlike the economist, there are many creative people in the country who choose to work in a creative industry to satisfy their artistic nature. But, yeah... I suppose they could work construction... or just go sit at a computer in an office and look at numbers all day.
I'm enjoying the debate, but I suspect we're unlikely to reach agreement. But for what it is worth, it is an economist's answer because it is an economic question: will the welfare of New Zealanders improve by subsidising the film industry?
If the answer is "creative people should get to do creative work," that is a lifestyle subsidy, not an economic argument – and taxpayers are entitled to ask why their money should fund one group's career preferences rather than another's.
You have conceded the central point: if other industries "can find a similar pathway, they should go for it." But we usually ask successful businesses to pay tax, not collect a 25% rebate. Extend your logic and every industry gets subsidised – which would be a short road to insolvency.
P.S. Data centres do not stop spending after construction – they employ technicians, consume electricity, and pay rent and rates year after year. They are just less photogenic.
You keep falsely reverting to the 'taxpayers are funding this' argument.
They are not.
It's a rebate. On money spent.
Money that can very easily be spent elsewhere.
The bulk of the industry is at Pinewood, UK currently. Queensland is also very busy.
Take a look into the rebates that they offer, and the massive injections of cash that they are receiving.
There is no other industry that is achieving that.
New Zealand takes a tiny crumb of this pie, and the numbers are quite impressive.
All the more so for no negative environmental impacts.
It's also a repeatable system. Once the infrastructure is in place, the films and the money keep on coming. Again, new money into New Zealand that would be spent elsewhere without hesitation, leaving NZ poorer, and other countries richer.
If you want to look into it further, investigate Queensland, and their specific additional rebate that is offered for hiring local crew. They see the value of injecting cash into their local economy. One of the reasons why so many skilled NZ Screen workers have left NZ and are working in this market now.
I was involved with a Kiwi software business. Do answer your criticism of Roger, we very much worked in "the real world". We wanted to create highly paid jobs for skilled Kiwis, and were able to do that without a subsidy.
What's more, they were permanent jobs; not like your example of stop-start employment creation.
Yes, even tho we were paying tax, we would have been tempted by the offer of subsidies, assuming it would be tied to meeting certain objectives.
IMO subsidies for the film industry were never justified, as other sectors could probably produce better outcomes in terms of full-time employment and export earnings. But the question for any industry should be WHY do you need it, AND how much better will the country be (if you get it), than if all the rest of the taxpayers didn't have to sacrifice so much their money (or have it spent on schools, hospitals etc)?
When the rebate was lower and was not competitive internationally over the last few years large numbers of skilled crew left the industry in NZ and moved offshore to countries with a competitive rebate.
So, no tax take in NZ from them anymore.
You argue that this money could be spent on schools, etc.
But, there is no taxpayer money being used.
So, your argument is based on ignorance of where the money comes from.
It's brand new money from offshore. $100 in, give back $25, keep $75.
Pretty sweet deal.
Take it or if you leave it... I will take my $100 and go to the Gold Coast with it. And then, you get $0.
(Not sure how you are going to build schools and hospitals with the $0 that you decided was a good deal...)
You forget RONs and the massive subsidies for cheap housing construction like Occam receive. MBIE is effectively a welfare scheme for middle class Wellingtonians. The article is completely correct but also highly selective - the examples you use are more about industrial lobbying than luxury beliefs perhaps, and there are many more egregious examples in the construction and transport industries. Bring Rob Henderson out - he’s wonderful!
You've nailed it, thanks Roger. Many other things can be added to this list, like "green" energy and climate change where economic modelling is, at best, sparse.
Spot on and so excellently expressed! This should be on the front page of the Herald! While some lofty ambitions and subsequent bad decisions might stem from a basic lack of economic acumen there is a good deal of hypocrisy and greed involved as well.
Preaching to the converted here.
It’s in our DNA to not rock the boat too much in this country and be polite rather than point out these things .
More of this please.
Let’s be honest. Preserving ‘heritage housing’ in leafy suburbs is in truth protecting property values for abodes which began as workers cottages or modest family villas but are now million dollar McMansions with only the Resene facades retained.
The market has completely collapsed especially for apartments so the whole question is moot.
Excellent article
Fascinating read. The idea that some beliefs are a kind of “luxury”, affordable only to those insulated from their consequences. It really makes you rethink how status and morality intersect. Makes me curious about where true value lies, beyond signaling.
Bravo Roger and (like most) I applaud your eloquent exposure of the facts.
But debate on this subject has become focussed on "arts" and fails to acknowledge the far more important and best of many points you've made including e.g. so-called "fossil fuel" to provide electricity when useless "renewables" (like solar, wind and... even hydro) fail. ALL "renewables" except nuclear are intermittent and dependent on sun, rain and... wind.
My question is: why does Huntly Power-station (our ONLY reliable backup to unreliable "renewables") have to run on coal imported from Indonesia (or anywhere else)?
Huntly was deliberately (and sensibly) located on top of and adjacent to vast New Zealand coalfields (The Waikato Coal Region)!
Have successive stupid New Zealand governments taxed onshore coal mining so that it's less costly to import coal? (Taxing must include so-called "carbon credits".)
Marvellous piece.
Ideals are not reality. Idealists often formulate policy based on abstractions i.e., purely on ideas, not drawing on premises that are rooted in actuality (i.e., the real world), on what is achievable, and at what cost (and to whom). When such people and their righteous causes are opposed, it is a short step to fanaticism, whereby coercion and draconian measures are inflicted on the rest of us in the name of the cherished cause. We saw this in the pandemic, we see it from climate change activists, and we see it in the safety-first culture currently permeating pampered western societies.
Film is a rebate on money spent. Not a subsidy. A small rebate on new money coming into New Zealand. Without the rebate in place, that money would never come into the country
The dollars are not “new” – the studios must first buy existing NZD from someone who already holds them, just like any other investor or customer who spends money in New Zealand. Once you see that, the film rebate is simply a subsidy: taxpayers pay part of the bill to induce one particular kind of spending, no different in principle from giving a 25% rebate to any favoured industry.
So, as a studio I will take my $100 and spend it all in Australia. You get nothing. Zero.
You could have taken my $100 and given me $25 back, and kept the rest...
But, apparently you don't like money.
Phil, implicit in your question is the claim that it is worth taxpayers paying your studio $25 for every $100 you spend on wages, rent and other local costs. Why should film get that treatment when every other business meets those costs without a rebate?
If "spend here or we go elsewhere" justifies a 25% subsidy, why not offer the same deal to data centres, call centres, or manufacturing plants? All bring "new money" and all would spend it elsewhere without sweeteners.
So why film? Because nobody gets photographed cutting a ribbon on a server rack. Strip away the glamour and what remains is national vanity dressed up as industrial policy.
And even then, there is what economists call crowding out. The workers, hotels and tradespeople you use would not sit idle without the rebate; they would be employed by other firms – in tourism, construction, events. The subsidy does not create resources; it reallocates them, with taxpayers paying one favoured sector to outbid the rest.
This is the economist answer. One with no real world understanding. Any worker knows that getting $100 handed to them, and returning $25 (after many months) is a very, very good deal.
If other industries are capable of achieving the same deal, they should be go for it. It would bring money into New Zealand.
Your example is flawed though. A server farm is an asset investment that benefits the owner almost exclusively. Outside of the initial construction.
A film employs hundred of New Zealand contractors across multiple industries for months and months. Then leaves. With no negative impact on the environment. Having spent all their money on that project. They then come back a few weeks later and do it again. And again. And again.
It's a great investment into New Zealand.
If other industries can find a similar pathway, they should go for it.
The economist argument again that film workers would do something else is the classic unimaginative, no creative argument from someone who lives in a theory world and has never created anything artistic, who doesn't have an artistic bone in their body. Unlike the economist, there are many creative people in the country who choose to work in a creative industry to satisfy their artistic nature. But, yeah... I suppose they could work construction... or just go sit at a computer in an office and look at numbers all day.
I'm enjoying the debate, but I suspect we're unlikely to reach agreement. But for what it is worth, it is an economist's answer because it is an economic question: will the welfare of New Zealanders improve by subsidising the film industry?
If the answer is "creative people should get to do creative work," that is a lifestyle subsidy, not an economic argument – and taxpayers are entitled to ask why their money should fund one group's career preferences rather than another's.
You have conceded the central point: if other industries "can find a similar pathway, they should go for it." But we usually ask successful businesses to pay tax, not collect a 25% rebate. Extend your logic and every industry gets subsidised – which would be a short road to insolvency.
P.S. Data centres do not stop spending after construction – they employ technicians, consume electricity, and pay rent and rates year after year. They are just less photogenic.
You keep falsely reverting to the 'taxpayers are funding this' argument.
They are not.
It's a rebate. On money spent.
Money that can very easily be spent elsewhere.
The bulk of the industry is at Pinewood, UK currently. Queensland is also very busy.
Take a look into the rebates that they offer, and the massive injections of cash that they are receiving.
There is no other industry that is achieving that.
New Zealand takes a tiny crumb of this pie, and the numbers are quite impressive.
All the more so for no negative environmental impacts.
It's also a repeatable system. Once the infrastructure is in place, the films and the money keep on coming. Again, new money into New Zealand that would be spent elsewhere without hesitation, leaving NZ poorer, and other countries richer.
If you want to look into it further, investigate Queensland, and their specific additional rebate that is offered for hiring local crew. They see the value of injecting cash into their local economy. One of the reasons why so many skilled NZ Screen workers have left NZ and are working in this market now.
I was involved with a Kiwi software business. Do answer your criticism of Roger, we very much worked in "the real world". We wanted to create highly paid jobs for skilled Kiwis, and were able to do that without a subsidy.
What's more, they were permanent jobs; not like your example of stop-start employment creation.
Yes, even tho we were paying tax, we would have been tempted by the offer of subsidies, assuming it would be tied to meeting certain objectives.
IMO subsidies for the film industry were never justified, as other sectors could probably produce better outcomes in terms of full-time employment and export earnings. But the question for any industry should be WHY do you need it, AND how much better will the country be (if you get it), than if all the rest of the taxpayers didn't have to sacrifice so much their money (or have it spent on schools, hospitals etc)?
It's a rebate on money spent. Not a subsidy.
It costs the taxpayer nothing.
When the rebate was lower and was not competitive internationally over the last few years large numbers of skilled crew left the industry in NZ and moved offshore to countries with a competitive rebate.
So, no tax take in NZ from them anymore.
You argue that this money could be spent on schools, etc.
But, there is no taxpayer money being used.
So, your argument is based on ignorance of where the money comes from.
It's brand new money from offshore. $100 in, give back $25, keep $75.
Pretty sweet deal.
Take it or if you leave it... I will take my $100 and go to the Gold Coast with it. And then, you get $0.
(Not sure how you are going to build schools and hospitals with the $0 that you decided was a good deal...)
Thank you.
You forget RONs and the massive subsidies for cheap housing construction like Occam receive. MBIE is effectively a welfare scheme for middle class Wellingtonians. The article is completely correct but also highly selective - the examples you use are more about industrial lobbying than luxury beliefs perhaps, and there are many more egregious examples in the construction and transport industries. Bring Rob Henderson out - he’s wonderful!