King Kong tax hand-out defended

New Zealand has to offer incentives to attract international film productions, Screen Council executive director Tim Thorpe said today.

Peter's Jackson's King Kong has benefited from the Government's Large Budget Screen Production Grant Scheme to the tune of $25 million.

The 12.5 per cent tax scheme was introduced in 2003 and aimed to attract international productions which spent more than $15 million in New Zealand.

"It is a reasonable scheme," Mr Thorpe said. "If New Zealand wants to try and attract the offshore productions...then it has to have something of this nature."

Mr Thorpe emphasised the scheme was also available to domestic films and but they were unlikely to spend that much money. It was also open to television productions.

"If New Zealand wants to be a player and take advantage of the fact these movies come here then it has to have something of this nature."

Advantages included the money being spent in New Zealand -- from staff wages through to motel and restaurant businesses, the improvement of skills in the industry here and flow on tourism and other benefits

The Government plans to review the scheme in March.

But ACT leader Rodney Hide today called for the scheme, which he described as unfair, to be dumped.

We shouldn't have the Government picking favoured businesses and industries...it is simply unfair," he said.

Mr Hide said under the scheme the film makers were allowed to estimate how much GST they paid through production expenses and then had that amount paid out.

"It's shocking, it's a straight hand-out for the favoured businesses, and in this case overseas business interests, when every plumber and electrician and homeowner in the country is having to pay GST."

Mr Hide did not question that big-budget productions created benefits to New Zealand.

"So does every business. What we should do is cut everyone's taxes and not put everyone's up and give breaks to the ones that (Prime Minister) Helen Clark wants to be photographed with."

A spokeswoman for Economic Development Minister Trevor Mallard confirmed King Kong had got an interim payment of $25 million excluding GST, but said no decision on the final amount was made as the film-makers were yet to file an application.

Apart from the benefits Mr Thorpe highlighted the spokeswoman said there were also spin-offs to other sectors of the economy -- high tech sectors such as digital content creation; from gaming to webdesign, computer assisted technologies, transport logistics and textiles.

Previously there has been criticism that the scheme favoured Hollywood productions leaving domestic productions out in the cold but the spokeswoman emphasised that small films could apply to the $51 million NZ on Air fund, or to the $25 million NZ Film Commission fund, for funds.

The Lion, the Witch and the Wardrobe also benefited from the scheme.

- NZPA