Treasury's comments in Cabinet Papers on the expansion of the film subsidy scheme are blunt, and rather likely right.
Treasury Comment
96. Treasury does not support any further subsidies for the film industry. The two evaluations of the current subsidy regime show at best small economic benefits, with limited evidence of spill-over benefits within the film industry, tourism and New Zealand in general. Further subsidies will only increase costs and offer weak benefits. The 2011 evaluation indicated that the LBSPG delivered net economic benefits of $13.6m over the 7 years 2004-2011, at an annual rate of return of less than 1%. In addition, the 2011 evaluation is based on generous assumptions about premiums paid by large productions on goods and services. The current regime is also estimated to have had an overall negative fiscal impact of $168m once tax revenue that would have been earned anyway is taken into account.
97. Other jurisdictions are offering large subsidies to attract films and further New Zealand subsidies will simply add to this cycle and future demand for larger subsidies. Permanently matching overseas subsidies to generate activity in New Zealand is not a sound basis for economic development policy and favours the film sector over other industries.It doesn't seem implausible that Lord of the Rings provided a tourism boost. The sales job provided by the films probably even made it easier for me to convince Susan that we should move here. But boy does that seem the kind of thing that would be hard to replicate.
Why can't the TPP include a line "None of us will provide any treatment for the film industry that differs from that which is provided to every other industry"?
We're helping to make things worse.
HT: @Economisive
Posting has been light as I am between offices. The open plan sheds we've occupied since July 2011 were packed up late last week for a move into our new offices in the refurbished law building. We were supposed to have moved in on Tuesday. But the building isn't ready. And so I'm between offices until, they now expect, 6 January. Happy holidays folks.
