Budget 2021: Film subsidies better for wellbeing than housing and climate change

A wellbeing impact analysis for dishing out $199 million in subsidies to filmmakers has found it to be better for the Government's budget priorities than money for public housing and climate change, and gives it roughly the same impact rating as $296m investment in clean water.

However, Treasury conceded that the spending was poor value for money, A substantial portion of the film subsidy will go to Lord of the Rings producers, Amazon Studios, owned by Jeff Bezos, the world's richest man.

The oversight appears to have been the result of analysing two rather limited budget priorities, "meeting critical cost pressures" and "funding time-sensitive and high priority manifesto commitments".

The subsidy scored highly on managing cost pressures, while other initiatives fell short.

Treasury said extra money for the subsidy equalled a "strong" contribution to the Government's Budget priority of addressing cost pressures.

By contrast, "sustainable funding" for Kainga Ora was rated a "medium" contribution to budget priorities, and was also rated "poor" for value for money.

A $296m investment in helping councils improve their management of freshwater, wastewater, and stormwater was also rated a "strong" contributor to the Government's budget priorities. It was also rated "poor" value for money.

A funding top-up for the Royal Commission into Historical Abuse in State Care and faith-based institutions was given a similar rating.

Climate change initiatives like the Transport Climate Package and Carbon Neutral Government Programme were given a "medium" rating when it came to contributing to the priority of fighting climate change.

One of the initiatives that came off best in the wellbeing analysis was $2.1 billion for main benefit rate increases which was rated "strong" value for money and "strong" for contributing to child wellbeing.

The documents also reveal that the film subsidy's days in its current format could be numbered.

Currently, the scheme is totally uncapped.

For every dollar a filmmaker spends they get between 20 and 40 cents back, depending on the type of film they are making.

A budget briefing to Economic Development Minister Stuart Nash said that the spending has been "significantly higher" than expected since 2016.

"[C]urrent annual expenditure on the international grant is more than three times higher than the baseline appropriation. This has resulted in annual top ups to the appropriation in each Budget, and in some cases has required out-of-cycle cost pressure bids," the paper said.

The paper said that the Minister of Finance had requested a report into the "fiscal sustainability" of the grant as a condition to getting more money in 2020.

That report has since come back and Treasury said it provides an "opportunity to consider the prospective increase in spend in future years" and gives some options for "strengthening fiscal control" of the grant.

MBIE requested $500,000 in the Budget to monitor the grant, and how much it was spending.