The slow creep of subsidies
The Government looks after glamour industries
Around 6pm on Saturday night one of the Sky Sport channels was showing a feature on the young Black Ferns star Jorja Miller. We had visitors so the TV was on mute while this programme played. As an old TV hack I’m often intrigued to see who’s done the work like operated the camera or edited the pictures or directed the story so I often hang around to see names on the credits.
As it turned out I didn’t recognise the names of any of the obviously skilful new generation of television practitioners. But that’s an aside.
What did catch my eye was that this particular feature had been commissioned originally for NZR+, the new on-line outlet which New Zealand Rugby hopes will evolve into a commercial cash cow.
The show was made by NHNZ, formerly Natural History New Zealand and owned by Dame Julie Christie. After the credits told me who the craftspeople involved were, there came a line advising this show would get a rebate under the Screen Production Rebate scheme.
This means that either 25 or 40 percent of the cost of making the programme on Jorja Miller will be refunded from the taxpayer’s purse. In other words, you and me have paid a sizeable chunk of the cost of making this rather inconsequential TV show.
On Monday morning, the news bulletins were broadcasting information about a new $70 million dollar fund to subsidise “events” like concerts featuring big time international stars. The narrative seemed to be that if Taylor Swift’s promoters had access to some of this money last summer when she was playing in Australia, they may have attracted the superstar to perform in New Zealand.
All of which got me thinking about why are taxpayers still in the business of subsidising certain industries again?
We used to have a highly subsidised economy in this country. Up till 1984 we provided direct cash to farming and manufacturing. That’s why there were 70 million sheep and factories which assembled cars and TV sets, and made shoes and clothes.
It’s why we paid up to 66 cents in the dollar in income tax and led former Prime Minister David Lange to memorably describe the New Zealand economy as being like a “Polish shipyard.”
Lange’s Labour government put an end to all that. Farmers were forced to become efficient in their operations and produce for the market. Expensive locally made or assembled goods like appliances and cars became more affordable and higher quality imports, and most significantly our income tax levels plummeted.
Yes there was pain. Jobs were lost and some farmers walked off their land. But forty years on no subsequent government has reversed those radical economic reforms in any meaningful way.
Yet there are increasing signs of what the political class often refer to as “mission creep.” The two examples given above involve what might be termed glamour industries - screen production and entertainment. The government is happy to prop them up.
But as taxpayers are we that well off that we can subsidise movies and TV shows to the tune of over a billion dollars for the next four years? It’s a scheme designed to attract big time film productions to this country but somehow modest little feature sports programmes on women rugby players qualify too - because they have a potential overseas audience through NZR+.
The fact that international audience will be miniscule appears to be irrelevant. NZR+ apparently has 280,000 registered users with the vast majority of them in this country. Much of the non-match content on the platform appears to be produced by NHNZ - with significant taxpayer funding.
The screen industry apparently “provided work” for about 24,000 people and, according to the Finance Minister Nicola Willis in her Budget media release, “generated $3.5 billion in annual revenue.” Just how that figure was arrived at isn’t explained.
Now these are the musings of a grumpy old man who doesn’t actually care if Taylor Swift ever comes to New Zealand again. She’s played here three times before without taxpayer subsidy so why should a broke country dig into its meagre resources to fund another appearance here nowadays?
That would make a grumpy old man grumpier.
I don’t discriminate on this front. One of my great passions is golf. The annual New Zealand Open at Millbrook in Arrowtown has received millions in government subsidies going back to when I was on the board of New Zealand Golf in 2008. Currently the annual grant is $600,000 a year. The prize money for the event is $2 million, although around twenty percent is paid in withholding tax by the players who win it.
Supporters of the concept say it brings economic activity to the Queenstown region and the TV pictures are great advertising for New Zealand scenery across the world. Reports claim $23 million of benefits are generated because of the golf tournament.
That’s the line that film producers and entertainment and sports promoters always use. “Look at the economic impact this has had” they’ll say. Good for them. But if they’re so good couldn’t they have done it without taxpayers subsidising it?
Governments putting money directly into certain industries are trying to pick winners. Are bureaucrats the best people to be the judge of what will fly and what won’t? I don’t think so.
Wouldn’t the obvious way to encourage investment in this country, not just from film and entertainment and sport but from all of economic activity, be to decrease the company tax rate ?
The Celtic Tiger that is Ireland roars because companies there pay 12.5 percent tax on their profits. Here it’s 28 percent. That corporate tax rate is why American tech and pharmaceutical companies have invested significantly in Ireland and the country’s economy is booming. The Statista website says Ireland’s GDP grew 9.7 percent in the first quarter of this year.
The Prime Minister and the Finance Minister here keep repeating their “growth, growth, growth” mantra but that won’t happen by tampering around the edges of the economy by subsidising industries that shout the loudest for handouts.
A subsidised economy was supposed to have ended forty years ago. The country can do better than its slow-creep return.
Hello grumpy old man…. from a grumpy old woman.
Do you remember the awful, ridiculous, nasty “poem” written by one Tusitia Avea (spelling may be array) which featured on the front page of some arts mag (she was dressed in a very tight, revealing, red dress and looked like a madam from the local whorehouse).
This “poem’s theme” was chasing down James Cook to kill him as the great coloniser. It was abhorrent but WE the taxpayer paid for it because this woman had an annual grant from the taxpayer funded Arts commission )?) to produce such drivel.
It was a substantial grant and I believe it is still filling her purse.
Defund this waste is my plea however I suspect the appeasement of the wokery is still to strong. Does this country have to be bankrupted before the waste ends?
The industry who returns the most for the NZ economy if the primary sector, and as pointed out by Peter has been standing on its own feet since the mid 80s. There should be no subsidies for any other group. This includes Arts, sports movies and so called sustainable power generation. If these groups cannot stand on their own feet, so be it, let them sink or swim just like farmers have had to for 40 years.