Editorial: Price to keep Hobbit in NZ is extortionate

Prime Minister John Key announces that the Hobbit movies will be filmed in New Zealand. Photo / Getty Images

Opinion

At some point during the negotiations over The Hobbit, someone should have stepped back and asked how much it was actually worth to this country to keep the filming here.

The hyperbole and hysteria of recent weeks might have led to the assumption that it was a matter of vital importance. Significant enough for Government ministers to be talking to executives of Warner Bros, the project's financial backer.

And important enough for New Zealand to jettison part of its workplace law and compromise its economic principles. The hyperbole was misplaced. These were places the Government should not have gone in order to secure two films whose benefits are more in the realm of the imponderable than the imposing.

Warner Bros has been granted concessions of two kinds to stop it shifting filming of The Hobbit elsewhere. The first is a further $10 million in tax breaks to add to the $50 million to $60 million already on offer.

Additionally, the Government will offset the films' marketing costs by $13.4 million. The second is a law change, passed under urgency, to clarify when someone is a contractor and when they are an employee.

In both instances, Warner Bros used fears that the films would be lost to this country to leverage a better deal for itself.

There was no question of The Hobbit being shot elsewhere before an industrial boycott - lifted before the negotiations began - involving actors wanting to bargain collectively. Warner Bros simply seized the chance to apply pressure on unrelated issues.

In both instances, it should have been resisted. The Prime Minister, however, always seemed relaxed about amending the law to provide "clarity" in the film sector.

This was not, as the Council of Trade Unions said, a case of the Government manipulating the situation to push through changes that disadvantaged workers.

Equally, it was not a step to which John Key was likely to be hugely averse. But the granting of exemptions such as this almost invariably equates to bad law-making.

At the start of the talks, Mr Key had seemed opposed to providing bigger tax breaks. Unfortunately, his resistance went only so far. Warner Bros should not have got a cent more than was already on the table.

The fact that deal was much less generous than that offered by the likes of Ireland and Hungary was irrelevant. It is foolish to go down the slippery slope of offering ever-greater subsidies to attract industry or investment. That race always ends in tears.

The hyperbole surrounding The Hobbit insisted it was crucially important to the future of the local film industry and for this country's image as a tourist destination. Both points are highly dubious.

This was about the shooting of just two films. If the industry cannot stand the loss of them, it must be in a sickly state. It was surely over-egging matters to suggest all international film-makers would sidestep this country as a consequence.

Indeed, at some stage, the local film industry should, like virtually every other New Zealand enterprise, be able to survive without subsidies. The talent and skills of local film-makers, along with outstanding scenery, should be the attraction for Hollywood moguls.

Unquestionably, the tourism industry did well out of the Lord of the Rings series. But the extent of the benefit can only be estimated.

In any event, the image is already ingrained, and the extra boost that The Hobbit might provide did not justify a greater outlay of taxpayer funds or a workplace law change.

Warner Bros is used to playing hard ball. The allure of Hollywood goes far in most corners of the world. It should not have gone so far here.

Confirmation that The Hobbit will be shot in this country is welcome. But the cost should not have been anywhere near so extortionate.