Knowledge wave: Screen industry closing in on $400m target

So what has been done in an industry that already has a Peter Jackson? The GIF screen production taskforce has thus far focused less on creating dramatic development and more on stable growth.

Its main goal is sustainable foreign exchange earnings of $400 million a year by 2008 - a more modest plan that can be accomplished with one big-budget production a year, Anderton says.

The taskforce also facilitated the creation of the Screen Council, an industry body charged with accomplishing that goal. Tim Thorpe, executive director of the council, says New Zealand is already well on its way to that $400 million target, with average earnings of $300 million over the past five years. And given this year's productions of King Kong and Narnia, that goal is on track, he says.

Thorpe warns, however, that the business is cyclical and that big films - such as The Lord of the Rings - can have a big impact, good or bad. A more realistic timeline to achieve sustainable growth is 2009 or 2010.

"If we rely too much on offshore productions coming here, we're going to get trapped into that boom- and-bust cycle," he says.

The taskforce's biggest accomplishment in the sector, Anderton says, was the establishment of an annual large-budget screen production grant fund in December 2003. The fund provides a 12.5 per cent grant incentive to productions with budgets between $15 million and $50 million that spend at least 70 per cent of their budget here. Productions with budgets above $50 million automatically qualify.

The distinction between grant and tax refund is an important one, Thorpe says. In the 1980s, some investors took advantage of the existing system by investing in productions because of the tax incentives being offered, with no intention of them ever being shown. Inland Revenue is still investigating some of these cases, he says.

"The Government was very scared of trying to set something up like that again."

The fund now has an annual budget of $40 million, which was undersubscribed in the first few years. But, Anderton says, it's likely to be tapped out this year, and the proviso has been left to increase the funding if necessary.

"The reason we didn't cap it is if somebody spends $100 million in New Zealand, and we give them 12.5 per cent of that back, we're still on the right side of it," he says.

Thorpe says one of the biggest issues facing the industry is the lack of a viable, high-speed internet connection, which is becoming more and more necessary in post-production work.

To solve the issue, the Screen Council is lobbying for access to the new Advanced Network.

But, Thorpe says, he has met opposition in that the network is not supposed to be for commercial uses.